STATE OF FLORIDA - Public Service Commission

MIKE 

HARIDOPOLOS 

President of the Senate 

J.R. Kelly 

Public Counsel 

Ms. Ann Cole 

Commission Clerk 

Florida Public Service Commission 

2540 Shumard Oak Blvd. 

Tallahassee, FL 32399-0850 

STATE OF FLORIDA 

OFFICE OF PUBLIC COUNSEL 

C/O THE FLORIDA LEGISLATURE 

111 WESTMADISONST. 

ROOM 812 

TALLAHASSEE, FLORIDA 32399-1400 

1-800-540-7039 

EMAIL OPC-WEBSlTE@LEC.STATE.FL.US 

WWW.FLORIDAOPC.GOV 

July 10, 2012 

DEAN CANNON 

Speaker of the 

House of Represenfatives 

Re: Docket No. 100330-WS, Application for increase in watedwastewater rates 

in Alachua, Brevard, DeSoto, Hardee, Highlands, Lake, Lee, Marion, Orange, Palm 

Beach, Pasco, Polk, Putnam, Seminole, Sumter, Volusia, and Washington Counties by 

Aqua Utilities Florida, Inc. 

Dear Ms. Cole: 

Attached for filing is an Original and one copy of Office of Public Counsel's 

Notice of Cross-Appeal to the First District Court of Appeal filed in the above-referenced 

docket and served on the parties July 5,2012. 

Thanks for your attention to this matter, please call me if you have any questions 

or concerns. 

COM 

APA 

ECR 

GCL 

RAD 

SRC 

ADM 

OPC 

CLK \-M 

cc: Parties of record 

Sincerely, 

Associate Public Counsel

OFFICE OF PUBLIC COUNSEL, 

V. 

AppellantKross-Appellee, 

AQUA UTILITIES FLORIDA, INC. 

AppelleeKross-Appellant. 

FLORIDA PUBLIC SERVICE COMMISSION, 

Appellee. 

IN THE FLORIDA PUBLIC 

SERVICE COMMISSION 

Case Number: 1D12-3196 

PSC Docket No.: 100330-WS 

NOTICE OF CROSS-APPEAL 

NOTICE IS GIVEN that the Citizens of the State of Florida, through J.R. 

Kelly, Public Counsel, State of Florida, Appellants, cross appeals to the First 

District Court of Appeals, the following orders of the Florida Public Service 

Commission, Order No. PSC-12-0102-FOF-WS, rendered March 5,2012, Order 

No. PSC-12-0259-FOF-WS, rendered May 29,2012, and PSC-11-0544-PHO-WS, 

rendered November 23, 201 1. Copies of these orders are attached. 

The nature of Order No. PSC- 12-0102-FOF-WS is a final order that 

disposes of an Order Approving in Part Requested Increase in Water and 

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CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of the foregoing Notice of 

Cross-Appeal was furnished by hand delivery, e-mail or U.S. Mail this 5" day of 

July, 2012 to: 

*Ralph Jaeger/Lisa Bennett, Ralph 

Jeager/ Rosanne Gervasi/ Samantha 

Cibula 

Office of General Counsel 


2540 Shumard Oak Boulevard 

Tallahassee, Florida 32399-0850 

Joseph D. Richards 

Pasco County Attorney's Office 

873 1 Citizens Drive, Suite 340 

New Port Richey, FL 34654 

*Cecilia Bradley 

Office of the Attorney General 

The Capitol - PL 


*Hand delivered 

*D. Bruce May/Gigi Rollini/ 

Stephen H. Grimes 

Holland & Knight LLP 

Post Office Drawer 8 10 

Tallahassee, FL 32399- 1400 

Kenneth M. Curtin 

Adams and Reese LLP 

150 Second Avenue North, Suite 1700 

St. Petersburg, Florida 33701 

Patricia A. Christensen

_. 

OFFICE OF PUBLIC COUNSEL, 

V. 

. 

Appellant/ Cross-Appellee, 

AQUA UTlLmS FLORIDA, INC. 

AppelleeXross-Appellant. 

FLORIDA PUBLIC SERVICE COMMISSION, 

Appellee. 

INTHE FLORIRA PUBLIC 

SERVICE COMMISSION 

Case Number: 1D12-3196 

PSC Docket No.: 100330-WS 

NOTICE OF CROSSAPPEAL 

NOTICE IS GIVEN that the Citizens of the State of Florida, through J.R. 

Kelly, Public Counsel, State of Florida, Appellants, cross appeals to the First 

\ 

District Court of Appeals, the following orders of the Florida Public Senrice 

Commission, Order No. PSC-l2-0102-FOF-WS, rendered March 5,2012, Order 

NO. PSC-12-0259-FOF-WS, rendered May 29,2012, and PSC-11-0544-PHO-WS, 

ren- November 23,20 1 1. Copies of these orders are attached. 

The nature of Order No. PSC- 12-0102-FOF-WS is a final order that 

disposes of an Order Approving in Part Requested Increase in Water and 

I

Wastewater Rates and Requiring Refunds with Interest. Order No. PSC-12-0259- 

FOF-WS is the Order granting Aqua Utilities Florida, Inc. (Aqua) Motion for 

Reconsideration and reconsidering and correcting errors. Order No. PSC-11-0544- 

PHO-WS is a procedural order. 

DATED this day of July, 201 2. 

Respectfully submitted, 

Patricia A. Christensen 

Associate Public Counsel 

OFFICE OF PUBLIC COUNSEL 

1 1 West Madison Street, Room 8 12 

Tallahassee, FL 32399 

Tel: (850) 488-9330 

Fa: (850) 487-6419 

Fla. Bar No.: 989789

CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of the foregoing Notice of 

Cross-Appeal was furnished by hand delivery, e-mail or U.S. Mail this 5" day of 

July, 2012 to: 

*Ralph Jaeger/Lisa Bennett/ Rosanne 

Gervasi/ Samantha Cibuld 

Lawrence Hams 

Office of General Counsel 




Joseph D. Richards 

Pasco County Attorney's Office 

873 1 Citizens Drive, Suite 340 

New Port Richey, FL 34654 

*Cecilia Bradley 

Office of the Attorney General 

The Capitol - PL 


*Hand delivered 

*D. Bruce May/Gigi Rollid 

Stephen H. Chimes 

Holland & Knight LLP 

Post Office Drawer 8 10 


Kenneth M. Curtin 

Adams and Reese LLP 

150 Second Avenue North, Suite 1700 

St. Petersburg, Florida 33701 

\- 

- , 

Patricia A. Christensen

ATTACHMENT A

BEFO@ THE FLORIDA PUBLIC SERVICE COMMISSION 

In re: Applicaiion for innease in 

water/wastewater nrtes in Alachua, Brward, 

DeSoto, Hardee, Highlands, Lake, Lee, 

Marion, Orange, Palm Beach, Pasco, Polk, 

Putnam, Seminole, Sumter, Volusia, and 

Washington Counties by Aqua Utilities 

Florida, hc. 

DOCKETNO. 100330-WS 

ORDER NO. PSC-12-0102-FOF-WS 

ISSUEDMamh5,2012 

The following Commissioners participated in the disposition of this matter: 

RONALD A. BRISI?, chairman 

LISA POLAK EDGAR 

ART GRAHAM 

EDUARDO E. BALBIS 

JULJE I. BROWN 

ORDER APPROVING IN PART REOUESTED INCREASE IN WATER AND 

WASTEWATER RATES AND REOUIRING REFUNDS WITH INTEREST 

BY THE COMMISSION 

APPEARANCES: 

BRUCE MAY, and GIG1 ROLLM, ESQUIRES, Holland 62 Knight LLP, Post 

Office Drawer 810, Tallahassee, Florida 32302-0810 

On behalf of Aqua Utilities Florida. Inc. (AUF). 

KENNETH M. CURTIN and ANDREW MCBRIDE, ESQUIRES, Adams and 

Reese LLP, 150 Second AvenueNorth, Suite 1700, St. PeterslnIrg, Florida 33701 

On behalf of YES Communities, Inc., d/b/a Amdondo Farms (YES). 

CECILIA BRADLEY, ESQUIRE, Office of the Attorney General, The Capitol, 

LO1, Tallahassee, Florida 32399-1050 

On behalf of the Attorney Gend and the Citizens of the State of Florida (AGl. 

PATRICIA CHRISTENSEN and STEP€€EN C. REILLY, ESQUIRES, Office of 

Public Counsel c/o The Florida Legislature, 111 West Madison Street, Room 

812, Tallahas~ee, Florida 32399-1400 

On behalf of the Citizens of the State of Florida (OPC).


DOCKET NO. 100330-WS 

PAGE 2 

JOSEPH D. RICHARDS, ESQUIRE, Pasco County Attorney’s Office, Pasco 

County Board of County Commissioners, 8731 Citizens Drive, Suite 340, New 

Port Echey, Florida, 34654 

On behalf of the Citizens of Pasco Countv (P asco). 

RALPH JAEGER, LISA BENNETT, and LARRY HARRIS, ESQUIRES, Florida 

Public Service Commission, 2540 Shumard Oak Boulevard, Tallahassee, Florida 

32399-0850 

On behalf of the Florida Public Service Commission (Staffl. 

CURT KISER, GENERAL COUNSEL; MARY ANNE HELTON, DEPUTY 

GENERAL COUNSEL; and SAMANTHA CJBTJLA, ESQUIRE, Office of the 

General Couusel, Florida Public Service Commission, 2540 Shumard Oak 

Boulevard, Tallahassee, Florida 32399-0850 

Advisors to the Florida Public Service Commission. 

Table of Contents 

DedDtion m 

I. BACKGROUND _....__.. .. .. . _. . ._. . :. . ._. . _. . .... . ....._...____ ._. __._. . .. . _. .. . .. .. __ ____ .._ ..._ ............ .. .... 5 

II. APPROVED STIPULATIONS ......................................................................................... 8 

m. ABBREVIATIONS . : 

......................................................................... ......... 8 

N. QUALITY OF SERVICE .................................................... : ............................................ 10 

V. 

VI. 

W. 

A. Quality of Senice .................................................................................................. 10 

B. Additional Actions for QuaIiw of Service ....__.____. .. . ._ _. . ._. .__ ...... ... . ._. .... . ...... . ....... 5 1 

RATE BASE .._. 

~ .............................................................................................................. 57 

A. Pro Forma Plant ..................................................................................................... 57 

B. U&U and Composite U&U for Protested Water Treafment System . 62 

C. U&U for Protested Water Distribution Systenis .................................................. ..74 

D. U&U and Composite U&U for Protested Wastewater Facilities ..... . 78 

E. U&U and Composite U&U for Protested Wastewater Collection . 82 

F. Deferred Rate Case Expense ............................................................................... ~ .... 85 

G. Working Capital Auowance ......_.... : ....................................................................... 87 

H. Total Rate Base ., .S 

COST OF CAPITAL ................................................................................... ~ _._.........___...... 88 

A. Deferred Tax.. .. .. . .. . .. .. . .. .S 

B. Leverage Fo rmula ., g9 

C. Overall Cost of Capital .......................................................................................... 89 

NET OPERATING INCOME ............_ 

~ ........................................................................... 90 

ABillingDd. . ................................................................................................ 90 

B. Test Year Revenues ............................................................................................... 92 

C. Allocation Methodology ........................................................................................ 93 

D. mate Revenues and Charges ............................................................................ 98 

E. Corporate IT Charges ........................................................................................... 112

ORDER NO . PSC-124102-FOF-WS 

DOCKET NO . 100330-WS 

PAGE 3 

F . Incentive Compensation ....................................................................................... 115 

G . Salaxies and Wages .............................................................................................. 118 

H . Bad Debt Expense ................................................................................................ 122 

I . Rate Case Expense ................................................................................................ 125 

J . Pre-Repression Operating Income ............................................................. : 

.......... 134 

VIII . REVENUE ....................................................................................... 134 

A . Pre-Repression Revenue Requirement ................................................................ 134 

DL RATES AND CHARGES ............................................................................................. 135 

A. Rate Cap Thresholds ............................................................................................ 135 

B . Rate Structures ..................................................................................................... 135 

C . Rate Consolidaton for Water .............................................................................. 138 

D . Rate Consolidation for Wastewater ..................................................................... 143 

E . Repression Adjustments ....................................................................................... 148 

F . Water and Wastewater Rates ................................................................................ 149 

G . Are Rates Affordable ........................................................................................... 150 

x OTHER ISSUES ........................................................................................................... 159 

A. Allowance for Funds pnrdenty Invested Cbarges (AFPI) .................................. 159 

B . customer Deposits ................... ........................................................................... 160 

C . Four-Year Reduction for DocketNo . 080121-WS .............................................. 163 

D . Interim Refid Calculation ................................................................................. 167 

E . PAA Refund calculation ...................................................................................... 168 

F . Four-Year Rate Reducton .................................................................................... 169 

G . Deferred Interim Revenues .................................................................................. 170 

Appendix ...................................................................................................................................... 175 

Attachment 1 - Water Treatment Plant U&U .............................................................................. 189 

Attacbment 2 - Water Distribution Systems U&U ...................................................................... 191 

Attachment 3 - Wastewater Plant U&U ...................................................................................... 193 

Attachment 4 -Wastewater Collection U&U ............................................................................. 194 

Schedule 1 -Capital Structure .................................................................................................... 195 

Schedule 2 -Revenue Resuirements ........................................................................................... 196 

Schedule 3-A - Water Band 1 Rate B. ase .................................................................................... 197 

Schedule 3-B -Wastewater Band 1 Rate Base ........................................................................... 198 

Schedule 3-C - Water and Wastewater Band 1 Adjustments to Rate Base . 199 

Schedule 4-A - Water Band 1 operating Income ....................................................................... 200 

Schedule 4-B - Wastewater Band 1 Operatiog Income ............................................................... 201 

Schedule 4-C - We.'and Wa&water Band 1 Adjustments to Operating Income . 202 

Schedule 5-A- Water Band 1 Rates ............................................................................................ 203 

Schedule 5-B -Wastewater Band 1 Rates ................................................................................... 204 

Schedule 3-A - Water Band 2 Rate Base .................................................................................... 205 

Schedule 3-B - Wastewater Band 2 Rate Base ........................................................................... 206 



Schedule 4-B -Wastewater Band 2 operating Income ............................................................... 209 

Schedule 4-C - Water and Wastewater Band 2 Adjustments to Operating Income . 210 

Schedule 5-A - Water Band 2 Rates ............................................................ ................................ 211

ORDER NO . PSC-12-0102-FOF-WS 

DOCKETNO . 100330-WS 

PAGE 4 

Schedule 5-B -Wastewater Band 2 Rates ................................................................................... 2.2 

Schedule 3-A- Water Band 3 Rate Base .................................................................................... 213 


Schedule 3-C - Water and Wastewater Band 3 Adjustmentsto Rate Base . 215 

Schedule 4-A- Water Band 3 Operating Income ....................................................................... 216 

Schedule 4-B - Wastewater Band 3 Operating Income ............................................................ .2 17 

Schedule 4-C - Water and Wastewater Band 3 Adjustments to operating Income . 218 

Schedule5-A- WaterBand3 Rates ............................................................................................ 219 

Schedule 5-B -Wastewater Band 3 .s ................................................................................... 220 

Schedule 3-A - Water Band 4 Rate Base .................................................................................... 221 




Schedule 4-B -Wastewater Band 4 operating Income ............................................................... 225 

Schedule 4-C - Water and Wastewater Band 4 Adjustments to Operating Income . 226 

Schedule 5-A - Water Band 4 Rates ............................................................................................ .7 

Schedule 5-B - Wastewater Band 4 Rates ................................................................................... 228 

Schedule 3-A - Breeze Hill Water Rate Base ............................................................................. 229 

Schedule 38 -Breeze Hill Wastewater Rate Base ..................................................................... 230 

Schedule 3-C -Bree z.e W Water and Wastewater Adjustments to Rate Base . 231 

Schedule 4-A- Breeze Hill Water operating Income ................................................................ ~ 3 2 

Schedule 4-B - Breeze Hill Wastewater Operating Income ........................................................ 233 

Schedule 4-C - BreeA Hill Water and Wastewater Adjustments to Operating Income ............. 234 

Schedule 5-A- Breeze Hill Water Rates ..................................................................................... 235 

Schedule 5-B - Breeze Hill Wastewater Rates ............................................................................ 236 

Schedule 3-A - Fairways Water Rate Base ................................................................................. 237 

Schedule 3-B - Fairways Waste- Rate Base ........................................................................ 238 

Schedule 3-C -Fairways Water and Wastewater Adjustments to Rate Base . 239 

Schedule 4-A - Fairways Water operating Income ................................................................... .240 

Schedule 4-B - Fairways Wastewater Operating Income ........................................................... 241 

Schedule 4-C - Fairways Water Adjustments to Operating Income ............... : . 242 

Schedule 5-A - Fairways Water Rates ....................................................................................... 243 

Schedule 5-B - Fairways Wastewater Rates ............................................................................... 244 

Schedule 3-A- Peace River Wakf Rate Base ............................................................................ 245 

Schedule 3-B - Peace River Wastewater Rate Base .................................................................... 2. 

Schedule 3-C - Peace River Water and Wastewater Adjustments to Rate Base . 247 

Schedule 4-A - Peace River Water operating Income ............................................................... 248 

Schedule 4-B -Peace River Wastewater Operating Income ....................................................... 249 

ScMule 4-C - Peace River Water and Wastewater Adjustments to Operating Income ............ 250 

Schedule 5-A - Peace River Water Rates.. .................................................................................. 251 

Schedule 5-B - Peace River Wastewater Rates ........................................................................... 252



PAGE 5 

ACumntRateCase 

I. BACKGROUND 

Aqua Utilities Florida, Inc. (AUF or Utility) is a wholly-owned subsidiary of Aqua 

America, Inc. (AAl). For purposes of this proceeding, AUF provides water and,wastewater 

service to 58 water and 27 wastewater systems in 17 counties under our jurisdiction. Water and 

wastewater rates were last established for this Utility in a rate case initiated in 2008.2 

On September I, 2010, the Utility filed an application for approGI of an increase in rates 

for both its water and wastewater operations. The Utility requested that this rate application be 

procad using the Propod Agency Action (PAA) procedures. By letter dated September 22, 

2010, our staff advised AUF that its Minimum Filing Requirements (MFFb) had deficiencies. 

The Utility corrected these deficiencies on October 14,2010, and this date was set as the official 

dateoffiling. 

In its MFR filing, AUF requested final rates that would result in additional operating 

revenue of $2,478,491 for water and $1,273,557 for wastewater, based on the historical 13- 

. month average test year ended April 30,2010, with requested adjustments for pro forma plant 

and Operating expenses. At the end of the. test year, the Utility recorded total regulated Opemting 

revenue of $8,255,766 and $4,824,531 for water and wastewater, respectively. AUF reported 

regulated net operating income for the test year of $605,852 for water and $526,976 for 

wastewater. 

Pending OUT decision on final rates, AUF requested interim rates. By Order No. PSC-10- 

0707-FOF-WS (Interim Rate Order), issued November 29,2010, in this docket, we approved an 

interim revenue requirement designed to generate mual water revenue of $9,062,892, an 

increase of $1,125,5883 or 13.19 percent, and wastewater revenue of $5,391,338, an increase of 

$600,219 or 11.81 percent. 

During the processing of AUF's requested rate increase, the Office of the Public Counsel 

(OPC), the Office of the Attorney General (AG), YES Companies, LJX d/b/a Arredondo Farms 

(YES), Mr. David L. Bussey (Mr. Bussey), Ms. Lucy Wambsgan (MS. Wambsgau), and P~SCO 

County intervened in this docket. However, Mr. Bussey and Ms. Wambsgau subsequdy 

withdrew their intervention. 

I 

DIU& the test year, 17,154 waier and 6,595 wastewatex customers receival Service ikon the UtiMy's regulated 

systemstbatareapatofthis proceeding. 

orda NO. PSC-09-0385-FOF-WS, issaed May 29,2509, in Docket NO. 080121-WS, In E: A~~lication for 

increaseinwarrr and waste- rates m bhua Bred Desoto. IIiehlaods Lake. Lee. Marion Orane e. palm 

Beach. PasM. P Olk pumam, Seminole. Sumter. VOW and W ashjnr?ton counties bv Aoua utilities Florida Inc. 

3 

Ofthe mal approved interim water revenue inaease of $1,125,588, we allowed $529,922 to be collected though 

interim rafes and defd the. remainder as a regulatory asset 

' Of the total approved interim wastewater revenuc increase of $600,215, we allowed $310,041 to bc collected 

through interim rates and defenedthe mnaimh as a reguhny asset

ORDERNO. PSC-12-0102-FOF-WS 


PAGE 6 

As a part of the PAA process, our staff conducted nine customer meetings throughout the 

state. Also, our staff served the Utility with numerous data requests, and OPC, along with YES 

and Pasco County, served the Utility with numerous interrogatories aud requests for production 

of documents (PODS). 

The original five-month statutory deadline for us to vote on our PAA action was March 

14,2011. However, by letter dated November 18,2010, AUF waived the time to vote through 

May 24,201 1, and we voted on the Utility's requested rate increase on that date. Pursuant to 

that vote, we issued Order No. PSC-11-0256-PAA-WS (FAA Order)* on June 13, 2011. 

However, Ms. Wambsgad and OPC timely med protests of portions of the PAA Order. Also, 

AUF and YES timely filed cross-petitions concerning portions of the PAA Order. Pursuant to 

Section 120.80(13)@), Florida Statutes (F.S.], any issue not disputed is deemed stipulated. 

Pending the resolution of these protests, AUF provided notice of implementation of PAA 

rates subject to refund with interest on July 1,2011. On July 21,2011, AUF provided AAI's 

guarantee of Am's corporate undertaking in the amount of $2,763,278. By Order No. PSC-11- 

0336-PCO-WS, issued August 10,201 1 (in this docket), we acknowledged the implementation 

of the PAA rates. 

Purmant to Order No. PSC-11-0309-PCO-WS (Order Establishing Procedure), issued 

July 25, 2011, the protests and cross-petitions of the PAA Order were scheduled for formal 

hearing? Ten service hearings were held thoughout the state: and the technical hearing was 

held on November 29 and 30, and December 1 and 7,201 1. 

On November 29, 201 1, the first day of the technical hearing, we noted that 23 issues 

b m the PAA Order were b e d stipulated pursuaut to Section 120.80(13)@), F.S., and 

approved those stipulations. Also, we approved a Type B Sti~ulation,~ whereby our staff and 

AUF agreed that the appropriate leverage formula to be used in setting final rates was the 

leverage formula in effect at the time of our final action on the Utility's requested increase. 

' Although order No. F'SGII-0256-PAA-WS, was prhnarily a PAA Order, as final agency don, we closed 

Docket No. 080121-WS. Also, although AUF's Chuluota system was not a part of the rate pceding m Docket 

No. 100330-WS, we determined that any quality of service problems dated to the chuluota water and wastewater 

would be urnsidered m Docket No. 100330-WS. 

%E%~gan~~withdrcwasaparty. 

' Order No. PSGll-0544-PHC-WS (F'rehearing order), issued Novemk 23, 2011, set forth the agreements 

reached by the parties and the decisions of the &hearing officer for purposes of the formal hearing. The 

Rthearing order also set old me issues in dispute and the issues deemed sbpulated pursuant to section 

120.80(13)(b), F.S. 

* service Hearhe were held in Greenacrcs (August 29,2011); No& Ft Mycrs (August 30,2011); Sebring (Angurt 

31,2011); Oviedo (September 1, 2011); Gainesville (September 12, 2011); F'ahtka (September 13, 2011); EustiS 

(September 13,201 1); Cbipley (septemba 16,201 1); New Port Richey (Oaober 11,201 1); and Lakelaud (October 

12,2011). 

A Type B Stipulation is where the Utility and our staff agree on an issue, and the Intervenors take no position



PAGE 7 

This Order addresses the Utility's quality of service, the requested &mi rates, and the 

appropriate disposition of the interim rates, implemented PAA rates, and regulatory assets.1o We 

have jurisdiction pursuant to Sections 367.081 and 367.082, F.S. 

B. Prior Rate Case and Monitoring Plans (Docket No. 080121-WS) 

Docket No. 080121-WS was established on February 29, 2008, with the Utility's 

notification of its intent to submit an application for general rate relief for its jurisdictional water 

and wastewater systems. By Order No. PSC-09-0385-FOF-WS (080121-WS Final Order), we 

found that the quality of service provided by AUF was for all systems, except the 

Chuluota system, which was found to be unsatishtory. Because of con- with AUF's 

customer service, we ordered a six-month Monitoring Plan to address: (1) AUF's apparent 

failure to handle customer complaints properly, (2) Am's call centers' process for handling 

complaints, and (3) iummct meter readings that resulted in improper bills. The Utility was 

required to submit recordings of ca~~ to its all centers," monthly reports, and other 

documentation to verify the accuracy of the meter readings and resulting customer bills." 

Upon completion of these reporting requirements, our stafF presented its recommendation 

regarding AUF's quality of service at the March 16,2010, Commission Confmnce. In addition, 

our staE provided an update of the Utility's compliance with the Department of Environmental 

Protection (DEP), county health depmlments (HDs), and water management districts (WMDs), 

which oversee AUF's compliance with environmental rules and regulations. After hearing from 

our staff, inkrested parties, and several customers at the conference, we concluded in Order No. 

PSC-10-0218-PAA-WS (April 2010 Order)I3 that, while prelimi~~~ results showed substantial 

improvement in AUF's customer service, additional monitoring was required to ultimately 

determine the adequacy of AUF's quality of service, and ordered continued monitoring of Am's 

customer service through December 31,2010, including customer complaints, meter reading and 

billing accuracy, and environmental compliance. We inshucted our staffto work collaboratively 

with AUF and the other parties in order to develop a cost-effective, efficient, and meaningful 

supplemental monitoring plan. 

Our staff met with repmenb&ives h m AUF, OPC, AG, and several customer 

representatives to discuss speci6cs of a cost-effective monitoring plan consistent wi& our 

direction. AUF and OPC agreed to a jointly-proposed Phase II Monitoring Plan and submitted 

their Agreement on Scope of Phase II Monitoring. In this document, they agreed upon the 

criteria by which quaIity of service would be measured By Order No. PSC-104297-PAA-WS 

(May 2010 0rder),l4 we approved the Phase II Monitoring Plan jointly proposed by AUF and 

OPC with certain Commission-ordered additions. The approved Phase 11 Monitoring Plan 

entailed monitoIing: (1) customer complaints; (2) estknated meter readings; (3) aesthetic water 

quality for seven of AUF's systems, (4) the sling of reports by AUF and OPC; (5) our Statrs 

ID Thm me 39 issues and 24 stipulations. 

" This was so that the Customer Senrice mtative's performance muld bc evaluated and assessed. 

~lrr staffalso vgified that a sampling of selected metermdings were ramate. 

13 

IssuedApril6,2010, inDocketNo. 080121-WS. 

" IssuedMay 10,2010, in DocketNo. 080I21-WS.



PAGE 8 

monitoring of environmental compliance; and (6) our statrs further evaluation of customer 

billing samples through calendar year 2010. 

Pursuant to the Phase II Monitoring Plan, AUF fled its Final Phase II Monitoring Report 

on February 28,2Oll.” Subsequently, on March 31,2011, OPC Ned its Response to AUF’s 

Summary Report and Current Status of AUF’s Quality of Service in Docket No. 100330-WS. 

Because OPC’s response concerning the Utility’s quality of service in Docket Nos. 

080121-WS and 100330-WS was combined, our &if€ mmbiued its discussions on quality of 

service for the two dockets in one ‘on, and we voted on the quality of service in the 

combined dockets. Further, pursuant to the PAA Order issued subsequent to this vote, we found 

that the quality of service. provided by AUF remained marginal, though it did appear that the 

quality of service had improved. Based on this &ding, we proposed to reduce the return on 

equity (ROE) by 25 basis points, and directed our &if€ to meet with AUF, OPC, and the other 

Intervenors to develop a Phase III Monitoring Plan. Fdy, because the Phase III Monitoring 

Plan could be adequately handled in Docket No. 100330-WS, we voted, as fjnal agency action, 

to close Docket No. 080121-WS. This vias done with the acknowledgment thaf while the 

quality of service for the Chuluota water and wastewater systems would continue. to be evaluated 

in Docket No. 100330-WS, the rates for those systems were not a part of the rate case in Docket 

No. 100330-WS. Because our finding on quality of service was protested by both AUF and 

several Intervenors, a Phase Ill Monitoring Plan was not developed. 

II. APPROVED STIPULATIONS 

We have previously approved several stipulated issues, stipulated adjustments, and 

partially stipulated issues. The stipulated issues are reflected later in this Order as “Stipulated” 

pursuant to the Prehearing Order No. PSC-11-0544-PHO-WS, issued November 23,2011, and 

subsequent decisions by us at the Technical Hearing held on November 29 and 30 and December 

1 and 7,201 1. A consolidated list of all stipulations is attached as the Appendix. 

III. ABBREVIATIONS AND TECHNICAL TERMS 

For reference purposes, the following is a list of acronyms and technical terms which have 

beenusedinthisorder: 

ComDanvandPartvNames 

AAI Aqua America, Inc. 

ACO Aquacustomeroperations 

AG Attorney General 

AS1 Aqua Services, Inc. 

AUF Aqua utilities Flori& Inc. 

OPC office of public Counsel 

l%is final report was a summary ofthe other reports.



PAGE 10 

MCLs 

MFRS 

MOU 

NARUC 

O m 

PAA 

PBWNs 

Psi 

POD 

RAFS 

ROE 

SARCS 

SFCO 

SMCLs 

ssu 

TR 

IITHMS 

U&U 

USOA 

WCI 

WMDS 

WRB 

WTP 

WWRB 

WWTP 

AOualitv of service 

MaximumContaminrmtek 

MinimumFilingRequirements 

Memorandum of Understanding 

National Associrdion Regulatmy Utility Commission 

Operations andMpvIp' ' 

Proposed Agency Action 

Pmxdomry Boil Water Notices 

PounaspersquareInch 

Production of Documents 

Regulatory AssessnentFees 

Retum on J3quity 

Staff-AsSisted Rate cases 

Short Form Consznt Order 

SecondmyMaximumcontarmnan ' tLevels 

So~StateSUtilitigInc. 

TllW3ipt 

Total Trihalomethanes 

usedanduseful 

Uniform Systems of Accounts 

Water Conservation Initiative 

WaterMaUagementDistricts 

WaterRateBand 

Water Treatment Pht Wastewater Rate Band 

Wastewater Treatment Plant 

IV. OUALITY OF SERVICE 

hrrsuant to Rule 25-30.433(1), Florida Admhktmb 've Code (F.A.C.), we determine the 

overall quality of service provided by the utility by evaluating the quality of the utility's product, 

the operatkg condition of the utility's plant and facilities, and the utility's attempt to address 

customer satisfaction. AUF's compliance history with the Department of Environmental 

Protection PEP), County HeaIth Departments (€IDS), and Water Management Districts 

(WMDs), and comments or complaints received from customers is also considered. 

AUF, OPC, Pasco County, and YES witnesses provided testimony concerning the quality 

of product and operating condition of AUF's 58 water and 27 wastewater systems. Our staE 

sponsored 19 DEP, HD, and WMD witnesses who provided testimony regmding each of AUF's 

systems located within their respective areas of responsibilities. In addition, testimony was 

provided describing AUF's attempt to address customer satisfaction. AUF, OPC, YES, Pasw, 

County, and staff witnesses testified regarding service hearings, customer complaints, 

correspondence, and prior AUF monitoring plans. Also, customers provided testimony at ten 

seMce hearings and provided comments at nine customer meetings.



PAGE 1 1 

1. Parties’ Argllments 

AUF asserted that the overwhelmhg evidence in this proceeding demonshates that the 

Utility’s overall quality of service is good as a result of its ongoing quality control initiatives, 

customer service enhancanents, and water quality improvement projects. 

AUF argued that there is undisputed evidence that AUF is in compliauce with the 

applicable DEP, HD, and WMD standards for the vast majority of its water and wastewater 

systems, and that notably, no witness for OPC tesiilied as to the operational condition of AUF’s 

plants and facilities. Furthermore, AUF maintained that none of the OPC Witnesses that testified 

on water and wastewater quality had any experience in water or wastewater quality analysis. 

AUF noted that, although Pasca County and YES attempted to argue that the quality of Am’s 

water and wastewater service was deficient, close review of the record showed that those 

arguments lack credible evidentiary support Neither Pasco County nor YES offered any expert 

testimony to support their claims rega~ding alleged water and wastewater quality deficiencies. 

AUF also noted that it continues to take steps to address billing and payment issues raised 

by customers in the last rate case, and in customer meetings and Savice hearings in the instant 

case. AUF argued that it has taken significant steps to ad& customer satisfaction in the area 

of aesthetic water quality. AUF asserted that a downward trend in the number of water quality 

complaints hn customers in the seven systems selected for the Utility’s 2008 Original 

Aesthetic Program shows that customers are seeing the benefits of the Utility’s aesthetic water 

quality improvements. In addition, AUF argued that the record shows it has proactively 

established its own quality of service metrics as part of a robust quality assurance program to 

achieve and maintain customer satisfaction, and has made steady improvement in the quality of 

customer service since the last rate case. 

OPC argued that the overall analysis of AUF’s systems related to DEP compliauce shows 

persistent water quality problems. The numerous violations, consent orders, and non-compliance 

incidents over the last tbree years demonstmte that AUF is mutinely out of compliance with DEP 

and water standards that kquently result in an unsatisfactory product. 

OPC argued that our mission statement states that we are committed to ensuring that 

Florida’s consumers receive some of their most essential seMces, including water and 

wastewater, in a safe, aEordable, and reliable manner. According to OPC, we should &d that 

AUF provides ~satisfactoIy service at unaEordable rates. Spedidy, OPC argued that the 

Utility’s overall quality of service is unsatisfactory as a result of its ongoing poor pexformmce in 

the areas of water quality, billing, and customer service, despite an ongoing monitoring program. 

According to OPC, customers’ testimony coukns that no significant improvements have been 

made. Further, OPC argued there was no significant improvement in the quality of service based 

on the eight months of additional Phase II monitoring.



PAGE 12 

a 

YES asserted that the semce hearing testimony, particularly the testimony provided at 

the Gainesville service hearin& demonsfram that the customer service, water quality, and billing 

practices of AUF are deplorable, unsBtiSfact0 ry, and do not warrant a rate inaease. Moreover, 

YES argued that the evidence demonstrates that the Utility’s quality of service to customers at 

Arredondo Farms has decliied since its last rate case, as evidenced by a 400 percent in- in 

the number of customers who testified at the GainesviUe service hearing in 201 1 as compared to 

the customer meeting held in 2010. 

YES argued that the evidence showed that AUF has been on notice for years of excessive 

sedimentation and h d water at Arredondo Fanns, but failed to take any action to remedy the 

problem. YES demanded that AUF should not be granted a rate increase on its promise to 

improve water quality; rather, AUF should not receive a rate increase unless and until water 

quality at Arredondo Farms has improved. YES also asserted that overwhelming evidence 

shows that AUF provides substandard and deficient customer service. In particular, the 

Gainesville senrice heating testimony makes clear that the Utility’s customer Service 

m- ‘ves (CSRs) serving Arredodo Farms are particularly rude and condescending. 

d. Pasw, county 

Pasco County’s position was that the operational conditions of A Ws plants and facities 

are unsatisfactory, as demonstrated by the numerous warning letters and consent orders issued by 

regulatory agencies. Pasco County asserted that rather than be out front of the issues and 

regularly maintain and upgrade its systems, AUF waited for a problem to OCCUI before spending 

money and time to address obvious issues which affect the environment Pasco County noted 

that AUF does not even do land smeys prior to purchasiig systems. Pasco County maintained 

that this is irresponsible and con6rms the lack of institutional control over AUF’s systems. 

According to Pasco ‘County, Rule 25-30.433(1), F.A.C., states that the testimony of a 

utility’s customers shall be considered in our determination of the utility’s quality of service. 

Pasco County maintained that the extensive testimony at the New Port Richey service hearing 

clearly shows that AUF’s water quality is poor. 

The AG adopted the position of the OPC on water quality and added that water safety 

should be of great conoem to this Commission. The AG argued that the DE%’ witnesses 

idenfied ongoing concerns about water safkty, and the perception of many customers is that the 

water is not safe to drink. The AG urged us to take steps to monitor the safety of AUF’s water 

and take whatwer steps necessary to ensure that customers can feel safe to drink the water and 

use it for cooking and bathing. 

The AG noted that numerous customers tfftified during the service hearings that AUF’s 

overall quality of service is Unsatisfactory. According to the AG, many of the same problems



PAGE 13 

have persisted since the last rate case. Ifthe water quality was saiisfactory, customers would not 

mind the cost of water as much; however, customers tesiified that they are paying excessive rates 

for water they cannot use. The AG supported the position espoused by OPC and concurred with 

OPC witnesses’ analyses of these complaints as well as those provided during the 2010 customer 

meetings and those filed with this Commission. 

2. Commission Analysis 

aChdJ ‘tv of Product and Owrating Condition 

As noted by AUF witness Luitweiler, many of AUF’s systems were constructed 40 to 50 

years ago. The majority of AUF’s water systems are small systems that serve primarily 

residential customers, utilizing basic chlorination for treatment The witness also noted that 

AUF’s wastewater systems vary in size and complexity but generally employ fmditional 

wastewater treatment methods, such as screening, extended d on, clarification, disinfection, 

and effluent disposal by spray irrigation or percolation ponds. 

Witness Luitweiler testitied that the water quality h m AUF’s water and wastewater 

facilities is good, and the faciities are in good operatin% condition. The witness asserted that 

AUF complies with DEP and applicable WMD regulations, and has a clearly defied strategy to 

maintain compliance. Further, the witness maintained that AUF has a strong commitment to 

customer service and is dedicated to attempting to address customer satisfacton as shown by, 

among other things, its ongoing efforts to improve the aesthetic quality of water for its 

customers. 

Witness Luitweiler stated that AUF is committed to operating its water and wastewater 

systems in compliance with all applicable standards of DIP, the various HDs, and the WMDs. 

He asserts that most of the systems have been recently inspected by the applicable regulatory 

agencies and have no outstanding compliance issues. He further asserted that there have been no 

Notices of Violation issued for any of the systems since the Final Order was issued in AUF’s last 

rate case. 

Witness Luitweiler testified that AUF has taken aggressive steps to resolve all of the 

environmental compliance issues identified in the 2008 mte. case. The witness noted that at the 

close of the evidentiary m rd in the 2008 rate we, AUF had open consent orders for five 

systems, including the Chuluota, The Woods, and the Zephyr Shores water systems. and the 

Village Water and the South Seas wastewater system. AU of those consent orders have now 

been closed with the exception of the ViUage Water consent order. 

Witness Luitweiler acknowledged that there are three new outstanding consent orders 

related to: (1) effluent disposal at the Village Water wastewater system; (2) storage capacity at 

the Sunny Hills water system; and (3) Gross Alpha Particle Activity at the Peace. Ever water 

system. However, he opined that AUF’s environmental compliance record in Florida is 

excellent Witness Luitweiler admitted that, as with any type of aging . ’ ture, there will 

be maintenance and repair requirements which, at times, will present environmental compliance



PAGE 14 

challenges. He asserted that the fact that virtually all of its systems are in compliance with 

environmental requkments is clear evidence that AUF is committed to environmental 

compliance. He concluded that no further action by this Commission was needed to ensure the 

quality of AUF's water and wastewater product and the operating condition of its facilities. 

Our staff sponsored 19 witnesses from the DEP, I D, and WMD that testitid regarding 

each of AUF's systems located witbin their respective areas of responsibility. These witnesses 

testified that, generally: the overall operation and maintenance of AUF's systems were in 

comphce with DEP, HD, or WhfD rules and regulations and the condition of AUF's facilities 

is satisfactory, with some systems having improved and others having remained the same. 

Witnesses testified that inspection records are satiskctory and most of the recent sanitary survey 

;nspeCtions indicated no deficiencies, although some did have a few minor deficiencies which 

AUF corrected in a timely ~lllmner. Sta€€-sponsod DEP witness Dodson testified that it is not 

uncommon to find a number of small deficiencies at any facility. She stated that in general, AUF 

is doing a good job of maintaining these fkilities. Staff witness Lott, who is responsiile for 

review of capacity analysis reports, +log virus inactivation studies, sole source aquifer studies, 

and permit determinations for all public drbking water systems in the DEP Centml District, 

testified that the permits he reviewed that have not yet been cleared for service are not indicative 

that the system is out of compliance, only that a full clearance has not been submittefl for the 

pennit within the five-year timehe. When staff witness Sloan was asked to compare the AUF 

faciities in Polk County to other utilities, she indicated that AUF's system are in good condition 

and comparable to other privately-owned utilities or county water systems. 

Representing the Northwest WMD, witness Chelette testified that AUF was not found to 

have significant compliance issues. Witness Walker, on behalf of the St Johns River WMD, 

tedied that in general, AUF does not submit compliance submittals in a timely manner, but 

once the data is requested, the Utility is able to provide it Witness Yingling, with the Southwest 

Florida WMD, found no compliance issues. 

In review of the 19 staff-sponsored witnesses' testimony regarding AUF's compliance 

history, OPC witness Vandiver testified that the testimony, whether taken hdividdy or as a 

.. 

whole, is permasive in detemmng that AUF's quality of seMce is unsatisfkcbry. The witness 

pointed out that 11 of these staff-sponsored witnesses indid that AUF's overall operation and 

maintenance of the treatment plants and distribution systems were satisfactory or met minimum 

requirements, giving the implication that the quality of service is satisfactory. However, witness 

Vandiver also noted that 28 of the 62 systems (45 percent) have issues affecting the quality of 

service provided by AUF, including 78 quality issues involving: (1) systems operating without a 

pemic (2) multiple systems exceeding maximum con taminant levels (MCLs), (3) failure to 

notify the public and DEP of positive E. coli test results, (4) sanitary sewage ovdows, (5) plant 

maintenance issues, and (6) numerous failures to submit timely reports. Witness Vandiver 

further noted that nine of the staff witnesses listed 23 issues that were included in consent orders, 

with an additional eight witnesses who identified 34 issues that were included in warning letters 

or non-compliance letters. In her testimony, witness Vandiver found it troubling that the staff 

witnesses idenaed pages of violations, non-compliances, and other deficiencies, and yet they 

deem the overall quality of the plant operations satisfactory. She argued that the overall picture

ORDER NO. PSG12-0102-FOF-WS 


PAGE 15 

PW by this staff-sp~nsored testimony is of a company that routinely fails to follow the des 

that are put in place to protect the customers. 

Witness Vandiver pointed out that while some may consider reporting requkments 

inconsequential in a general sense, it is these repolt;np requirements that allow regulatory 

authorities to monitor the level of the quality and safety of the plant operations. 'when the 

witness compared the magnitude of the customer testimony, as well as the number of quality 

issues listed by the staff witnesses, she found that they frequently address the same issues. The 

OPC witness noted that the customers are the ones who are harmed if the utility fails to report 

instances whue it exceeds MCLs or when poorly maintaiued facilities result in sewage spills or 

main breaks and customers are subjected to potential health risks when the company fails to 

adequately and properly issue precautionary boil water notices (PBWNs). 

OPC witness Poucher testified that he reviewed DEP's voluminouS files dealing with 

water quality issues with all of the AUF systems dating as far back as 2002, as well as our staffs 

recommendation dealing with water quality that was part of the original PAA proceeding in this 

docket The witness noted that during the 2008 rate case there were sevd water quality 

violations that were unresolved at the time of the hearings. He also stated that having had an 

additional year to clean up its act, so to speak, AUF appears to ham resolved its existing formal 

violations that have been identilied by DEP. 

OPC witness Woodcock testified that since 2007, there have been a total of 26 primary 

water quality violations, 20 total coliform violations, 15 secomhy violations, and 15 violations 

for late or not reported parameters. Since 2010, there have been a toM of 3 primary water 

quality violafions, 6 total coliform violations, 2 secondary violations, and 1 violation for late or 

not reported pammetem. Since 2007, the AUF wastewater treatment plants have been issued 

minor out of compliauce notices 96 times and significant out-of-compliance issues 39 times. 

We note that the UtXty currently has open DEP consent orders for the Village Water 

wastewater system and the Peace River and Sunny Hills water systems. In addition, the Utility 

currently has open warning letters for the Jasmine Lakes, Palm Terrace, and South Seas 

wastewater systems, and the Interlachen Lakes EstatedPark Manor and Village Water water 

systems. Systems with DEP consent orders and warning letters that have been closed during the 

last several years include the Chuluota, The Woods, Twin Rivers, Tomoka View, Zephyr Shores, 

and Jungle Den water systems, and the Jasmine Lakes, Palm Terrace, South Seas, and Arredondo 

wastewater systems. The status of each system that is currently under enfoment is discussed 

below. 

(1) Open Consent Orders 

As shown in the table below, AUF currently has three open consent orders related to the 

Village Water wastewater treatment plant @"I?) regarding effluent disposal, the Peace River 

water treatment plant (WTP) regarding Gross Alpha Particle Activity above MCLs, and the 

Sunny Hills WTP regarding storage capacity and water monitoring concerns.



PAGE 16 

System 

V i e Water WWTP 

Peace River m 

sunny Hills m 

(a) Viage Water WWTP 

county Current Staius 

Polk DEP Consent Order 

HaTdee DEP Consent Order 

Highlands DEP Consent Order 

AUF witness Luitweiler testilied that the previous owner of the Village Water wastewater 

system constructed the ponds below the ground water table. A combination of DEP regulations, 

policies, and actions has created an inkactable situation for this small, predominantly industrial 

wastewater system. AUF continues to pursue two solutions: (1) leasing laud and constrncting a 

spray field and associated piping, and (2) entering into an agreement with the City of Lakeland 

and building infiastruc ture to convey hated effluent through an effluent disposal pipeline to an 

electric generating statiox~ Pursuant to the consent order, AUF has executed a long-term lease 

with a nearby property owner for land for a spray field for effluent disposal, and has completed 

the soil evaluation and the prelimiwry design of the spray fields. The findings of the soil 

evaluation prompted AUF to negotiate with DEP an extension of the deadlines in the consent 

order to give AUF time to take one last look at an alternative involving use of the effluent 

disposal system operated by the City of Lakeland. Discussions with the City of Lakeland are 

contin-, however, without at least partial funding fivm the WMD, witness Luitweiler believes 

that this alternative is not likely to be economically viable. The WMD has advised that fundkg 

is not likely to be available. Both solutions are prohibitively expensive for this system with 48 

industrial customers. The WWTP has operated for 30 months with only one exceedance of a 

permit limit reported on monthly Discharge Monitoring Reports (DMRs). AUF has continued a 

dialog with DEP about the impact (or lack there00 of the status quo, regulatory obstacles to 

potential alte-matives, and the potential impact on rates (which is substantial). Witness 

Luitweiler tedied that just the capital cost of the spray field solution alone is approximately 

$354,915, and just the capital cost of the Lakeland interconnect solution alone is approximak1y 

$527,555. 

Staff-sponsored DEP wilness Greenwell testilied that the Village W e wastewater 

faciity was significantly out of compliance. and that the Utility has been unable to address the 

long-term disposal solution for the ponds and the inadequate maintenance. of the ponds. Wilness 

Greenwell pointed out that a consent order was executed on August 21,2007, for operating the 

facility without a permit and failure to maintain the ponds, including proper access control. The 

consent order has been amended multiple times and remains open. Witness Greenwell further 

stated that while AUF still remains out of compliance with the pond issue, the consent order 

gives them a certain amount of relief and AUF is attempting to find a comtive action to address 

the pond disposal issue. 

@) Peace River m 

AUF witness Luitweiler and M-sponsored witness Greenwell testified with respect to 

the DEP commt order h m June 2010 for the Peace River water system that required AUF to



PAGE 17 

perform bi-monthly sampling for Gross Alpha Particle Activity and Combined Wum for 24 

consecutive months. According to witness Luitweiler, AUF also conducted a pilot study to 

evaluaie possible treatment methods. Although the facility is currently in compliance with the 

MCLs for Gross Alpha Particle Activity and Combmed Radium, witness Luitweiler pointed out 

that d t s of the bi-monthly sampling triggered a reqbent under the consent order to begin 

to design radium removal txaiment Design was completed and a permit application was 

submitted to DEP in June 2011. DEP issued a construction permit on August 18,2011. AUF 

executed a contract with the supplier of the treatment system and bid the comtruction in 

September 201 1. At the time of the hearing, AUF was in discussions with the two lowest 

bidders (approximately $139,000 and $144,000) about qualiscatons and hteqm&& ‘on of the 

bids, and expected to make an award by the end of October 201 1. AUF anticipated completion 

of construction before February 15, 2012 (180 days from the issuance of the DEP permit, as 

rquked under the consent order). AUF has requested that the cost of this pro forma project be 

included in rate base. We discuss inclusion of the pro forma adjustment later in this Order. 

(c) sunny Hills TKTP 

AUF witness Luitweiler testified that the Sunny Hills consent order, which was executed 

in December 2010, involved DEP’s determination that the existing storage capacity for the water 

system was not s.&icient Therefore, DEP required AUF to, among other things, increase its 

current storage capacity. AUF submitted plans and a permit application to DEP for a new 

storage tank and related piping. DEP issued a consindon permit for installation of the storage 

tank, piping, and related improvements required by the consent order. Witness Luitwder 

indicated that AUF executed a contract for construction of the tank and improvements in the 

amount of $231,076, effective September 14, 2011. At the time of the hearing, work was 

underway and AUF anticipated the project to be complete and in service in December 2011. 

Witness Luitweiler explained that AUF is requesting that the cost of this pro forms project be 

included in rate base. Again, we discuss inclusion of this pro forma adjustment later in this 

Order. 

According to Staff-sponsored DEP witness Penton, the Sunny Hills consent order was 

aimed at addressing the Utility’s: (a) failure to provide a total useful finished water storage 

capacity of at least 25 percent of the system’s maximum day water demand as required under 

Rule 62-555.320(19)(a), F.A.C.; (b) failure to provide satisfactory results of a 20 sample 

bacteriological well survey before placing Well 1 into permanent service after having been out of 

operation for more than six months, as required under Rule 62-555.315(6)@), F.A.C.; and (c) 

failme to perform routine nitrate/nitrite monitoring and raw bacteriological monitoring of the, 

water produced by Well 1, when it was producing water for public consumption in July and 

August 2007, 8~ rt+d under Rules 62-550.500, 62-550.512, and 62-550.518(2), F.A.C. 

Wituess Penton stated that the consent order is still in force. She Med that the conditions 

related to the bacteriological well survey and the failure to perform routine nitratehitrite 

monitoring have been addred The consent order remains open to resolve the water storage 

capacity issue.



PAGE 18 

(2) open warning Letters 

AUF has four open warning letters related to the Jasmine Lakes and Palm Tenace 

wastewater systems regamling treatment plant operational compliance concerns, the Jnterlachen 

Lakes EstatedPark Manor water system related to source water testing positive for E. coli, and 

the V i e Water water system related to lead and copper monitoring, as shown in the table 

below. 

(a) Jasmine Lakes and Palm Tenace WWTP 

AUF witness Luitweiler testified that AUF moved quickly to respond to the issues 

identified by DEP at its Jasmine Lakes and Palm Terrace wastewater facilities. AUF met with 

DEP on July 28,2011, to discuss all actions taken Furthermore, witness Luitweiler stated that 

AUF has provided DEP thorough witten responses which document that the issues identi6ed by 

DEP have been resolved. For Jasmine Lakes, witness Luitweiler pointed out that DEP staff 

conducted an inspection of the facility on September 8,2011, and indicated that all outstanding 

maintenance issues had been satisfactoriy addressed and that a closure letter h m DEP would be 

forthcoming. 

Witness Luitweiler noted that DEP conducted a final inspection of the Palm Terrace 

system on October 5,2011, and indicated at that time that all items had been satisfactorily 

addressed and that a closure letter would be forthcoming. Witness Luitweiler indicated that the 

most substantive issue relates to the insiallation of a replacement force main at Palm T ern to 

convey treated wastewater effluent to a spray field. The prior main had been installed by a 

previous owner before the system was acquired by AUF, and traversed a concrete apron 

conveying storm water to a Pasco County storm water pond. AUF applied to Pasco County for a 

permit to replace the main on June 1,201 1, and received the permit on July 20,2011. Witness 

Luitweiler confirmed that construction was completed on August 3,201 1, and DEP was present 

to witness the completion and testing of the new force main. 

Staff witness Greenwell testified that AUF received warnjng letters from DEP for 

Jasmine Lakes and Palm Terrace on June 23,201 1, for being out of compliance for maintenauce 

issues. Although these warning letters are still outstanding, witness Greenwell explained that 

AUF has taken Corrective action and the systems are substantially in compliauce. Concerning 

Palm Terrace, at the time of the hearing, witness Greenwell indicated that DEP had not decided 

whether to attempt to enter into a consent order with AUF. Witness Greenwell discussed the 

plant operational situation at Palm Terrace and acknowledged that a 2,000 gallon discharge into 

a storm water retention pond was an unauthoorized discharge and would be considered a violation



PAGE 19 

of DEP regulations. Concerning the above-ground pipe that broke causing the discharge, witness 

Greenwell suggested that it "rtainly was constructed in a manner that did not seem consistent 

with sound engineering practices. However, witness Greenwell testitid that AUF appears to be 

moving towards amending the compliance problems. When asked about the Palm Terrace plant 

being taken off line with the wastewater sent to a regiod plant, witness Greenwell indicated tbat 

for smaller plants, regional control would have clear advantages; however, he does not consider 

Palm Terrace to be a small plant. Witness Greenwell was not aware of any discussions to take 

the facilty off line. ' 

While not related to the DEP warning letter issued for Palm Tefiace, Pasco County raised 

a concern regarding whether AUF had the legal authority to maintain a required overflow pipe 

on County property. AUF witness Luitweiler explained the dispute by indicating that prior to 

AUF's acquisition of the Palm T ern wastewater system, and in accordance with normal utility 

practice, an overflow pipe was installed in the berm between the percolation pond and an 

adjacent Pasco County storm water management pond. He pointed out that the purpose of the 

pipe was to prevent water in the pond from ever flowing over the top of the berm in an 

uncontrolled manner that could erode and eventually induce failure of the berm. Although the 

witness maintained that the current location of the pipe is legally permissibfe, he noted that, in an 

attempt to resolve the matter without litigation, AUF engaged a consulting engineer and a lawyer 

to secure an easement from the County for this pipe. Meanwhile, Witness Luitweiler explained 

that AUF has placed a cap on the pipe which can be removed in an emergency, but that 

otherwise provides assurance to the County that the pipe is not discbarging into the storm water 

basin. 

Pasco County witness Mariano testified that some nearby residents of the Palm Terrace 

WWTP alerted the County to a possible discharge to a County storm water pond adjacent to 

AUF's effluent storage ponds. The witness visited the site with some County personnel aud 

residents in May 2011. At that time, he observed a PVC pipe crossing a County storm water 

spillway. The pipe was above ground and appeared to be recently repaid, as a small piece of 

cut PVC pipe was on the ground next to the repair. The replaced pipe was visible behind AUF's 

fence. The repaired joint pipe was leaking slowly at the time of the visit. Wltness Mariano 

indicated that that the pipe carries treated effluent to the AUF's disposal spray field A DEP 

letter indicated that a break in this pipe discharged effluent to the County's pond on May 17, 

2011. Witness Mariano noted the leaking pipe and discarded PVC were potential violations of 

the County storm water regulations, but the County chose not to prosecute these violations if 

AUF agreed to bury the pipe. AUF had since applied for and received a County right-of-way use 

permit to place the pipe underground. 

Additionally, witness Mariano noted that while viewing the aboveground pipe, he 

noticed percolation in the County's storm water pond while effluent was flowing through the 

pipe. That raised concerns regarding a possible leak in AWs efnuent pipe or another source of 

discharge of effluent to the County pond. Witness Mmino testified that County personae1 

hvestigated historical records and found a plan sheet showing a direct pipe connection from 

AUF's ponds to the County's pond With the assistance of AUF personnel, a direct pipe 

connection was discovered. Witness Mariano pointed out that the County has no record that



PAGE 20 

would give AUF the authority to maintain this pipe on County property or to allow the direct 

discharge of its effluent to the County pond. The County asked AIJF to provide any 

documentation it had regarding this matter. AUF indicated that it had no record of any permit or 

application to Pasco County. Witness Mariano acknowledged that AUF had replaced the pipe, 

notkg that the pipe had to go underground to meet code. Pasco County gave an easement to 

AUF because that pipe had to go underground a long way to get to AUF’s spray field. 

Pasco County argued that if AUF had done a simple laud m ey at the time it phased 

the Palm Terrace system, it would have learned about the easement issue as well as the above- 

ground pipe at that time. Pascn County maintained that AUF acted irresponsibly in this instance 

and that it confirms the lack of institutional control over AUF’s systems, which is costing its 

customers in higher rates. 

@) Interlachen Lakes EstateslPark Manor WTP 

Staff witness Montoya testified that a DFP warning letter was sent out to AUF on August 

9, 2011, advising AUF of possible violations resulting h m July 2011 sou~ce water tests that 

showed the system tested positive for E. coli h m Well No. 2. AUF fded to notify DEP, 

complete repeat sampling per the Ground Water Rule, and issue Public Notices within 24 hours 

of knowledge of the E. coli positive result. AUF has since performed pper repeat sampling and 

issued a public notice. However, witness Montoya pointed out that DEP has k e d the well 

con taminated and that AUF has decided to take steps to submit an application for 4-Log approval 

to deal with the microbial contamhition. Well No. 2 has been taken off line and the E. coli issue 

has been resolved. Witness Montoya indid that DEP drafted a consent order for failure to 

notify DEP and to issue a public notice within the reqW time, and, at the time of the hearing 

planned to send the consent order out to AUF. AUF is replacing the second well and has filed an 

application for 4-Log approval with DEP. Witness Montoya stated that this shows DEP that 

AUF is monitoring its bacteriological results and the quality of its water. 

(c) Village Water WTP 

Staffwitness Sloan testified that on Januay 20,201 1, the Polk County HD sent Warning 

notices to AUF for failure to sample for nitratehitrites in 2010 for the Orange w/Sugar Creek 

water system, Gibsonia Estates water system, and Rosalie Oaks water system. At the heariug, 

witness Sloaa indicated that those notices are now closed and there is a new warning notice for 

the Village Water water system issued November 12,2011, for lead and copper monitoring 

during June through September 201 1. The warning letter will be closed once AUF samples next 

Ym- 

(3) Other Compliance Concerns 

(a) Chuluota WTP and WWTP 

AUF witness Luitweiler testified that in AUF’s last rate case, we denied a rate increase 

for both Chuluota’s water and wastewater systems because we found that the quality of seMce



PAGE 21 

for those systems was unsatisfactory. That tinding was based primarily on water quality 

compliance issues involving total trihalomethaues (lTHMs), which were ongoing with the DEP 

at the time of the last rate case. Since the last rate case, witness Luitweiler points out that AUF 

has made significant improvements to the Chuluota water system and, to date, has invested over 

$2.1 million dollars in plant improvements to address the ?THM issue. As a result, a consent 

order was closed in December 2010, and a follow up inspection in January 2011 noted that the 

plant was in good operating condition with no deficiencies. 

Witness Luitweiler testitied that there is a reference in staff-sponsored DEP witness 

Miller's testimony that AUF had not implemented public access rem for the Chuluota WWP. 

However, witness Luitweiler concluded that AUF had worked diligently and cooperatively with 

the City of Oviedo to bxing into operation the reuse connection between the Chuluota effluent 

disposal system and the City's irrigation system. Since mid-October, AUF has been providing 

substantial volumes of reuse water to the City's irrigation system on a daily basis. Witness 

Luitweiler asserted that the system is now in compliance. 

StafF witness Miller later acknowledged that AUF just began providing public access 

reuse to the City of Oviedo on October 18,201 1. This system is curzenty still in violation of its 

annual average flow for the effluent disposal of the spray field; however, the annual average flow 

should be coming down. Witness Miller stated that DEP is not plauning on taking any formal 

enforcement action because it appears that AUF is on the way back into compliance. 

(b) River Grove WTP 

Test results for 'ITHMs show the River Grove system exceeding the MCL. Witness 

Luitweiler testified that AUF has evaluated a number of options to cost-effectively address this 

issue. Based on that evaluation, AUF is currently negotiating an agreement with F'utnam County 

to purchase water. Witness Luitweiler indid that available water quality information 

reviewed h m Putnam County currently indicates that its water is in compliance with the 

standards for ?THMs. AUF anticipates entering into the agreement with the County before the 

end of the year, obtaining permits for the project, and installing the interwmect in the first 

qwuter of2012. 

(c) Jungle Den WWP 

At his November 16,201 1 deposition, AUF witness Luitweiler testified that he believed 

that a DEP inspection and November 5, 2010 noncompliance letter that listed several 

deficiencies at the Jungle Den WWTP, percolation ponds, and spray field, were conducted 

pursuant to an application for a permit renewal for Jungle Den. Witness Luitweiler indicated that 

AUF's consulting engineer prepared a full response, filed December 7,2010, that addressed the 

DEP issues. He believes that the deficiency issue has been resolved with DEP. In his direct 

testhony, staffwitness Miller testified that DEP had no records indicating a response h m AUF 

regarding various deficiencies addressed in the noncompliance letter. At the hearing. he updated 

his testimony by stating that the condition of the plant was addressed in the DEP permit renewal

ORDER NO. PSC-124102-FOF-WS 


PAGE 22 

and the compliance schedule is part of the permit. 

satisfactorily addressing the compliance issue. 

(d) Peace River WWTF' 

Therefore, it appears that AUF is 

AUF witness Luifsveiler testified that there is a reference in staff wiiness Greenwell's 

testimony that the Peace River W?VTP is out of compliance for undefined maintenance issues. 

Witness Luitweiler stated that a waming letter has not been issued for this matter, and that a 

wnshuction permit was issued for installation of a surge tank, digester ta& and other 

improvements at this facility on February 21, 2011, which AUF believes addresses the 

maintenance issues mentioned by witness Greenwell. Witness Luitweiler pointed out that 

constmction drawings for the project axe complete and AUF is reviewing a proposal from a 

conlmcbr. We note that witness Greenwell did not specify the maintenance issues refd to in 

his testimony. Based on witness Luitweiler's response, it appears that AUF bas adequately 

addressed the maintenance issue at this system. 

(e) South Seas WWTP 

AUF witness Luitweiler testified that DEP issued a Short Form Consent Order (SFCO) 

for the South Seas WWTP for permitting and maintenance issues, and for having released 

wastewater without providing proper treatment AUF completed all the requirements wbich 

included repairs to tanks and other various repairs and upgrades to the system under the permit 

conditions. DEP inspected the facility in September 2011 and issued a SFCO to close out all 

outstanding issues at this facility on October 11,2011. 

Staff witness Ekk testified that the South Seas WWTP had been under DEP enforcement 

for the past three years and that AUF had worked with DEP to resolve the case. AUF made 

repairs to tanks and other various repairs and upgrades to the system. 

(0 Precautionary Boil Water Notices 

AUF argued that it follows DEP guidelines on issuing PBWNs, and that not one of the 

DEP witnesses gave any indication that AUF's policies and practices for issuing these notices 

failed to comply with DEP guidelines. AUF also believed that the evidence showed that Pasco 

County's policies and practices with respect to PBWNs is virtually the same as those of AUF. 

AUF witness Luitweiler testified that ATJF is committed to ensuring, and works hard to 

ensure, that its customers are properly notified. He testified that most boil water notices are 

precautionary advisories issued as a result of main breaks. If the main breaks or the resultant 

shutdown results in a loss of pressure to the system below 20 psi, Florida regulators require 

issuance of a PBWN to the a€fected customers because of a remote possibility that 

depressurization of the system could result in contamhtion. Witness Luitweiler explained that 

lifting the advisory usually quires collection of two sets of bacteria samples on two consecutive 

days once system pressure is restored. The laboratory test requires at least 24 hours to complete



PAGE 23 

the process. Therefore, these advisories are normally in effect for three days, and sometimes 

longer if the laboratory is not open, for instance over a weekend or holiday. 

Witness Luitweiler testified that the verbiage in the mandatory notice is dictated by the 

regulations and can give the impression that contamination of the water system has occurred 

However, in almost every case, tests come back clear demomtmhg that there never WBS any 

con tamination of the system. The notices are required and are issued out of an abundance of 

caution to protect susceptible persons fiom a remote possibility of con tamination, 

Wltness 

Luitweiler aclmowledged that immediate notification to all affected customers is not a realistic 

expectatiOn; however, Florida regulators require notification within 24 hours of a triggering 

went 

In discussing how the PBWNs are issued, witness Luitweiler testified that AUF, and most 

water systems in Florida, predominantly use hand delivery of notices to reach customrs, 

particularly if the number of affected customers is fewer than a couple hundred. This process 

can take time and is labor intensive depending on the size and make-up of the system. However, 

the process is generally effective and meets the requirements of the regulations. Witness 

Luitweiler explained that AUF’s notices generally also include the address for the AUF website 

and a phone number to allow customers to call for more information, Witness Luitweiler pointed 

out that AUF also posts information internally for its Customer Service Representatives (CSRs) 

in the call centers, enabliig CSRs to provide infomation to customers who might experience a 

service outage, including when service is expected to be restored and whether a PBWN is or will 

be in effect 

For large scale outages or advisories affecting hundreds or thowads of customers, AUF 

posts a notice on the AUF website. AUF also posts updates and notices when an advisory is 

lifted. In discussing AUF’s abiity to utilize phone notification, witness Luitweiler testified that 

AUF has available a system for launcbing a phone campaign to customers for whom the Utility 

has phone number records. AUF utilizes this system in Pennsylvauia, and occasionally in other 

states, including in Florida when circumstances warrant. The system can call thousands of 

numbers and deliver a short message m a matter of minutes. The message will direct customers 

to the AUF website where more information and updates are posted. The message will also 

typically provide a phone number which customers can call for more information. However, 

neither this method, nor any other method, is a perfect method for notifying customers. It has 

been witness Luitweiler’s experience that there is no fail-safe process to ensure that every 

customer receives timely notification of a triggering event, Wind and rain can cause hand 

delivered notices to be lost or damaged. Notices might not be seen by residents until they enter 

or exit their home by the door on which the notice is posted. Phone calls miat not reach every 

resident, might not be answered, or might go to a voice message ador answering machine and 

not be played back immediately. If a radio or television advisory is given, customers may not 

have radios or TVs tuned to the station Canying the notice at the time it is broadcasted Further, 

witness Luitweiler pointed out that newspaper notices m o t be expected to provide timely 

notification,



PAGE 24 

AUF issues PBWNs in advance of planned outages necessary to make system 

improvements. For example, witness Luitweiler testified that the clearwells at the Tomka View 

and Twin Rivers water systems had to be taken out of service to install liners to address a 

directive from the Volusia County €ID. AUF provided advance PBWNs and delivered bottled 

water to customers. With the implementation of the federal Ground Water Rule in Florida in 

2010, witness Luitweiler indicated DEP has required additional testing of raw water (prior to 

disinfection) for bacteria, and has required PBWNs to be issued in circumstanCes where bacteria 

are found in the well, even if si~~ultaueow sampling of the disinfected water at the point of entry 

or in the Wbution system are clear of bacteria This new rule has resulted in AUF issuing 

several PBWNs in the past two years. Additionally, witness Luitweiler explained that a Tier 1 

PBWN has long been required when a combination of routine and follow-up distribution system 

samples on collsecutive days test positive for a combination of total and fecal coliform bacteria 

Such an event is generally considered to be an indication of bacterial con tamination of the 

distribution system warrantin ’ g prompt and aggressive notification of customers to avoid or 

minimize exposure. Witness Luitweiler stated that AUF has never experienced a violation 

caused by this category of ckcumstances. 

Witness Luitweiler described Am’s response to incidents at Jasmine Lakes, Palm 

Terrace, and Chuluota. On April 16,2010, AUF issued a PBWN at the Jasmine Lakes system 

when well test d t s were found positive for E. coli bacteria, In that situation, AUF notified 

customers using an outbound phone campaign with a recorded message, posted the notice on its 

website, and provided a copy to the after-hours call Senrice. In November 2010, valve 

replacements and installation of new valves prompted notifications at Palm Terrace in 

conformance with DEP regulations. Phone notification was also used during this event. In May 

2011, a break on a 4-inch water main at Palm Terrace occurred and PBWNs were hand 

delivered. Another main break occurred on a Cinch main in Palm Terrace in August 2011; in 

that case, AUF implemented an emergency telephone notification to 1,660 phone numbers. A 

June 201 1 planned outage was implemented in the Chuluota system to accommodate a project by 

Seminole County to replace and re-align storm water piping and replace sidewalks. Witness 

Luitwder indicated that AUF prepared and distributed, by hand delivery, notices to potentidy 

afFected customers of anticipated localized water service interruptions necessitated by the main 

relocation work. 

OPC witness Dismukes testified that the PBWNs were of particular concern for the 

customers and provided several examples of customer complaints about notices being untimely 

or non-existent OPC witness Vandiver prepared a summary of staff witness testimony 

addressing PBWNs. She reported that in that list, there are eight witnesses that addressed 183 

instances where notices were provided She noted that one witness, staff witness Rodriquez, did 

not identify how many instances, but referenced occasions since 2009 that DEP had been 

notified days after the interruption of seMce by the utility through the local health department 

who had received complaints &om customers. Witness Vaudiver pointed out that, except for 

staff witness Rodriguez, the other staff witnesses made statements that they have been notified 

timely and that AUF had timely notitied the customers. However, witness Vandiver believed 

that these statements appear to be based on self-reporting by AUF. She noted that staff witness 

Carrico indicated that her office was properly notified of each of these PBWNs in a timely

ORDERNO. PSC-124102-FOF-WS 


PAGE 25 

manner, the utility documents submitted to DEP indicate that PBWNs were issued to their 

customers, and witness Canico had not been made aware of any incident when PBWNs were not 

issued Wimess Vandiver pointed out that none of the staff witnesses testifled that they spoke 

with my customers who confirmed that the PBWNs were in fact distributed and received timely. 

In its brief, Pasco County argued that AUF had failed repeatedly to properly and fully 

inform its customers of PBWNs in the Jasmine Lakes and Palm Terrace service areas. Pasco 

County believed that AUF provided no indication that it even investigated the complaints and 

asserted that AUF certainly made no aitempts to improve its delivery of the PBWNs. Pasw 

county maiatained that custom are not satisfied and AUF is doing little if anything to correct 

the situation. 

Pasco County witness Marim testitid that, as a County Commissioner, he received 

complaints hut AUF PBWNs. During 201 1, he received complaints from the Jasmine Lakes 

and Palm Terrace senice areas where AUF failed to properly and fully inform its customers of 

the PBWNs. Witness Marian0 assisted the residents in Preparing a Boil Water Notices Survey 

and sending the completed surveys to Governor Rick Scott with a copy to us. Witness Mariano 

explained that approximately 340 customers completed the survey. He believed that the results 

of the m ey indicate that AUF has been inconsistent in notifjkg customers about the need to 

boil water. Witness Mariano pointed out that according to the suiveys, 137 customers stated that 

they never received any form of notice, 78 received notice via a letter size piece of paper, and 92 

received a door hanger. Only 17 indicated they received a phone call fium AUF. 

Several staff witness, including wifnesses Canico, Greenwell, Harrison, and Penton, 

acknowledged that AUF has issued multiple PBWNs over the last three years. They Wed that 

AUF issued the notices as required and Mer discussed how the PBWNs are handed. Witness 

Canico testified that water systems, including AUF, self-report when it comes to boiled water 

notices. Staff witness Dodson testified that AUF issued PBWNs as required, completed 

necessary corrective actions, conducted follow-up sampLing, and rescinded the notices as 

required and in a timely mauner. Witness Dodson noted that the Utility does not always have 

control over the chain of events that necessitate the issuance of PBWNs, and it is not uncommon 

to find a number of PBWNs issued for any faciity. Staffwitness Rodriquez Wed that the two 

AUF systems that she reviewed, Arredondo Estates and Arredondo Farms, have had PBWNs on 

variouS occasions since 2009. However, she is not completely sure if AUF has notified the 

customers in a timely manner in each occasion. Witness Rodriquez testified that sometimes DEP 

had been notified several days after the inkamption of senice by the Utility. Complaints about 

the interruption of service due to water main breaks or other problems (power failure, rep&) 

have been received by the local HD, and they have forwarded the complaints to DEP. Wmess 

Rodriquez investigated some of the complaints and found thaf lately, AUF has been responding 

better to PBWN issues and notilication to the customers. Staff witness Sloan testified that, in 

each instau=, the notices were hand delivered to all affected water customers. 

Based on DEP witness testimony that AUF's policies and practices for issuing PBWNs 

complied with DEP guidelines, it appears that AUF attempts to follows DEP guidelines on 

issuing PBWNs. However, there is evidence that AUF has been inconsistent in notifying



PAGE 26 

customers. Noting that there is no fail-safe process to ensure that every customer mives timely 

notilication, we find that AUF’s policies and procedures regarding PBWNs requires further 

monitoring. Although AUF did provide evidence that it has developed procedures to provide 

customer notilication in multiple ways, and enables its call centers to provide informarion to 

customers who inquk about service outages, we believe M er action is required. In Section 

IV. B. Additional Actions for Wty of Service below, we will go into detail as to what those 

actions should be. 

(4) Commission Conclusion on Quality of Product and operating Condition 

We believe that the evidence in the mrd demonstrates that AUF is in compliance with 

the applicable regulatory standards for the majority of its water and wastewater systems. Many 

of Am’s water and wastewater systems were comtructd 40 to 50 years ago, aud, because of the 

aging Mas-, there have been maintenan ce, repair, and environmental compliance 

challenges. With 58 water and 27 wastewater systems, compliance can be daunting. However, 

we do note that there are seven systems with current consent orders and warning letters. Also, 

several staff witnesses testified that ATJF had failed to do appropriate testing with regard to 

nitratednhites and lead and copper. Further, AUF has failed to timely provide required reports 

to DEP or CH. Also, based on OUT review of the testimony of the customers, the 19 staff 

wiinesses, and the witnesses of the inteae~rs and ATJF, it appears that there are still problems 

with Am’s attempt to address customer satisfaction. Therefore, while we note that AUF has 

attempted to respond to service quality problems, and that its service has improved, we find that 

the Utility has not yet reached a satisfactory level of quality of service. 

We agree with OPC‘s argument that it is necessary to follow the rules that are put in 

place to protect the customers. While we note that it is not uncommon to fjnd a number of 

deficiencies at any facility, we find that the number of deficiencies lied in testimony still 

preclude a finding of satisfactory seMce. 

We do not take lightly the arguments of some of the Intervenors that the perception of 

many customers is that the water is not safe to drink. Water safety is always a great concern to 

this Commission. In fact, it is largely for that reawn that we seek the testimony of 

representatives from the DEP, HD and WMD, which are the agencies with primary jurisdiction 

over the quality of the product and operating conditions of the facilities. We are also aware that 

the operating and compliance status of any utility’s plants and facilities do not necessarily 

coincide with the customers’ perception of whether the ufility’s product is of acceptable quality. 

However, weighing the evidence provided by the experts from the agencies with primary 

jurisdiction in determining the quality of the product and oPerarjng conditions of the facilities, 

and also considering the evidence provided by intervenors’ witnesses, and customer testimony, 

we find that pursuant to Rule 25-30.433(1), F.A.C., the quality of the utility’s product and the 

operating condition of the utility’s plant and facilities are marginal.



PAGE 27 

2. Attempt to Address Customer Satisfaction 

a Service H-es 

Ten customer service hearings were held throughout the state between August 29 and 

October 12, 2011. Approximately 371 customers attended these noticed hearings and 170 

customers provided sworn testimony regarding AUF’s quality of service. Local legislators and 

county officials also attended several of the service hearings and provided comments. The 

following table provides an overview of the number of customers who attended and spoke at 

each of the service hearings. 

Of the 466 Specisc concerns expressed by customers, approximately 19 percent related to 

water quality. These complaints included sediment, color, sludge, fib and pressure. 

Approximately 34 percent of the concerns related to billing. These complaints involved 

backbilling, meter reading accuracy, service disconnections, high rates, and affordability. 

Twenty percent of complaints related to outages, boil water noticing, impact on properties and 

communities, and customer service. The remaining 27 percent of complaints encompassed other 

issues, such as lifestyle changes and health problems. 

AUF witness Chambers testified that the Utility thoroughly investigated each customer 

issue raised at the service hearings. She stated that while many customers discussed issues that 

had already been resolved, some customers’ concerns were addressed on site at the appropriate 

service hearing and other customers’ concerns were addressed subsequent to the service 

hearings. Witness Chbers presented testimony regarding AUF’s responses to customers’ 

billingrelated testimony. AUF witness Rendell also presented testimony providing responses to 

Specisc concerns, such as AUF’s negotiations with the City of Lake Worth for a revised bulk 

water rate, customers’ desire to receive service from Pasco County or the Florida Governmental 

Utility Authority (FGUA), customers’ year-round payment of a monthly base facility charge 

(BFC), and the cost to ratepayers of AUF’s acquisitions of other utility systems.



PAGE 28 

According to OKs brief, customers continued to complain about AUF’s poor water 

quality, plant maintenance, and customer service during the service hearings. As further 

discussed below, OPC witness Vandiver testified that the complaints h m the 2010 customer 

meetings were similar in nature to those h m the 201 1 service hearings. OPC witness Poucber 

testified that AUF has the highest complaint rate of any Commission-regulated utility in Florida. 

His analysis showed that complaints fled with this Commission against AUF represented 41 

percent of the total water and wastewater complaints fled during 2010, and 4.4 percent of the 

complaints fled during the lirst ten months of 201 1. However, he admitted that he did not make 

any adjustments to make the comparison more comparable between different-sized utilities, such 

as determining the percentage of complaints on a per 100 customer basis. We note that our 

Commission audit staff analyzed water and wastewater utility complaints in another case and 

detmnhed that, when compared on a per 100 customer basis, AUF did not have the highest 

percentage of cornplaints for Commission-regulated water and wastewater utilities during 

2010.16 

According to OPC witness Dismukes, concerns raised at the service hearings included 

AUF’s slow response time in resolving problems and criticisms of CSRs’ interactions with 

customers. She noted that customers also expressed complaints regarding untimely or 

inadequate information provided by the Utility, billing issues such as unfair billing practices and 

meter reading inconsistencies, and keatment by CSRs ranging from ineffective to apathetic or 

rude. Witness Dismukes further explained that some of AUF’s field service technicians seem 

indifferent to damages that they may cause, and one customer testified that an honest field 

tedniciau feared losing his job if he was too outspoken with regard to the Utility’s overcharging 

for servies. 

OPC witness Poucher asserted that the service hearing complainis were a reiteration of 

prior testimony, customer letters, and complaints already fled with this Commission. He 

testified that although complaints regarding AUF’s failure to consistently and timely read meters 

have subsided, new issues have risen with respect to automatic meter reading activities that have 

generated complaints about inaccurate , inconsistent, and nonexistent monthly billing, as well as 

high bilk and backbilling. 

Witness Poucher emphasii that the number of witnesses who testiiied at the service 

hearings represents only a fraction of the number of individuals who attended- He noted that 

many customem were excluded fiom attending and participating in the service hearings because 

many of AUF’s systems serve seasonal customers who do not reside in Florida during the 

summer and early fall months. In addition, witness Poucher stated that many customers were 

excluded due to work, disability, or child or parental care responsibilities. Witness Poucher 

emphasii that testifying witnesses presented evidence reflective of the entire customer base. 

He concluded that the testimony reinforces record evidence that demonstrates AUF’s business 

plan is producing an unacceptable quality of service for a product that is not drinkable at rates 

Sa Order No. PSCII-OSQI-SC-WS, issued Novemk 22,2011, m Docket No. 11025dWS, Initiation of show 

. Four Po& Utility Chuor& ‘on in Polk Countv for noMm of Commission ruks and 

rermlahons as orrtlm . ed m the Florida Public Senice commission’s mame ement audit for Four Points Uti@y 

cornoration and Bimini Bav utilities Commm ‘on issued June 201 1, p. 14. 

l6 - 

clillseDxmdmf5aealnst

ORDDNO. PSC-12-0102-FOF-WS 


PAGE 29 

that are dordable. He further concluded that although the Utility was notified that it needed 

to improve its Service and was given more than a year to do so, the service hearings did not 

produce customer support for AUF as he expected they would. 

According to Pasco County, of the 36 customers who teaed, 25 complained of poor 

water quality. Senator Fssano testiiied that the water was undrinkable and substandard, and 

Representative Leg provided similar commenrs. The County asserted in its brief that many 

more customers complained of poor water quality in the 759 petitions signed by Jasmine Lakes 

and Palm Terrace customers. 

b. customer Comulaints and Corremdence 

According to AUF's brief, since its last rate case, the Utility has formed a Complaint 

Analysis and Remediation Team (CART) and developed an electronic work queue (EWQ), 

purchased equipment to facilitate on-site meter tests in order to achieve efficiencies and enhance 

customer confidence in the process, and standadzed its processes for its field service 

technicians to improve interactions between field tecbnicians and the call center in order to 

enhance customer responsiveness and efficiency. In addition, AUF has worked with YES 

representatives to effectively address unique issues affecting the Arredondo Farms mobile home 

Park. 

According to AUF witness Chambers, undisputed evidence shows that the volume of 

complaints filed against the Utility has fallen dramaticaly since its last rate case. Witness 

Chambers asserted that the reduction is signiscant given that customer complaint volumes 

typically increase during a contested rate case proceeding. She further alleged the reduction is 

also impressive given the well-orchestmed efforts by interested parties and other non-party 

special interest groups to encourage customers to complain in hopes that the sheer volume would 

persuade us to deny AUF's quest for rate relief. Finally, AUF asserted that the reduction in the 

volume of complaints is telling in light of the aggressive and innammatory tactics employed by 

OPC witness Poucher, who encouraged customers to complain and characterid the instant rate 

caseasa%w." 

Witness Chambers emphasized AUF's strong commitment to customer service. She 

stated that the Utility is dedicated to anticipating and meeting the needs of its customers by 

effectively utilizing CSRs, field techniciaus, and technology to enhauce its quality of service. 

AUF has listened to its customers' concerns and implemented several signilicant proactive 

measures to address customer satisfaction. She explained that AUF's commifment involves 

having a Customer Field Services Manager in Florida who manages all customer Senice 

functions, including service orders, billing issues, water quality issues, meter reading and 

customer interface. In addition, witness Chambers noted that the Utility has a dedicated call 

center for AUF-related calls and is cammit&ed to ensuring that CSRs are well-trained to respond 

to customers in an effective, prompt, and courteous mer. 

As previously noted, witness Chambers stated that in an effort to improve AUF's 

customer service, AUF developed CART, which held its fust meeting in Septemk 2009. The

ORDER NO. PSC12-0102-FOF-WS 


PAGE 30 

CART meets monthly to address escalated calls (customer calls transferred to a Senior CSR or a 

Supervisor) and to iden@ trends and problem areas, as well as areas where additional m g is 

needed. Witness Chambers explained that the EWQ is a work order created for an escalated call 

when a Senior CSR or Supervisor is not available. She aclolowledged that an EWQ is closed 

after only one attempt to reach the customer, regardless of whether a Senior CSR or Supenisor 

is able to leave a voicemail message for the customer. The system tracks EWQS and generates 

reports that are reviewed weekly. Witness Chambers denied any knowledge of instances ~LI 

which CSRs refused to transfer a customer’s call following the customer‘s request to speak with 

a Supervisor. Witness Chambers noted zero consumption as one of the problem areas identified 

by the CART, a billing-related issue wbich invohes the Utility un- ’ acustomerdueto 

factors beyond the Utility’s control (such as meter equipment damaged by vandalism, a weather 

event, or third-party construction activities, or repeated move-ins/move-outs at a residence) or 

due to a malfunctioning electronic radio transmitter (ERT). She testified that the number of 

escalated calls has signiscantly decreased since the CART was formed. 

Witness Chambers calculated that the number of complaints against AUF filed with this 

Commission in 2010 was approximately 24 percent lower than the number filed in 2007. From 

2009 to 2010, the number of complaints filed decreased by 19 percent. Additionally, the Utility 

averaged 10 cornplaints per month for the period January-July 2011. In contrasf the 

averaged 18 per month and 13 per month in 2009 and 2010, respectively. According to witness 

Chambers, despite the well-archestrated effort by OPC, YES, Pasw County, and other non-party 

special interest groups to encourage customers to complain against AUF, the volume of 

complaints has decreased. Witness Chambers claimed that OPC witnesses Poucher and 

Vandiver provided incomplete and one-sided testimonies with regard to these complaints and 

that OPCs failure to acknowledge the significant drop in complaints underscores the bias of its 

aualysis. 

Witness Chambers and OPC witness Poucher disagreed with regard to the nature of 

customers’ calls to AUF’s call center. Witness Chambers deemed witness Poucher’s assumption 

that all incoming calls are customer complaints erroneous when, in fact, records show that the 

vast majority of calls involve routine issues such as move-in and move-out requests, payment 

questions, and requests to verify account balances. In response to a Commissioner’s question, 

witness Chambers testified that AUF may receive a greater number of complaints than other 

states in which AAI provides services due to greater water quality challenges in Florida. 

In response to customer testimony from the service hearings that CSRs were rude, 

wilness Chambers explained that she, along with two supervisors and one other manager, 

Listened to all available calls during which customers alleged CSRs were rude. Witness 

Chambers acknowledged that there was one call in which the CSR could have been more helpful 

but she countered that none of the CSRs were rude. She admitted thaf while reviewing these 

calls, she perceived that CSRs reciprocated customers’ frustrations to some degree. 

In its brief, AUF charactmized Food & Water Watcb, a nonprofit organization that 

challenges the corporate control and abwe of consumers’ water resources, as a lobbying group 

whose political agenda is to abolish privafely-owned water utilities throughout the country.



PAGE 3 1 

According to AUF, Food & Water Watch is involved in a campaign called Florida Flow (For 

Local ownership of Water) (also known as FlowFlorida) to request that state officials prevent 

any new acquisitions by AUF, reduce the Utility’s rate of return, and help communities 

remunicipalize local water systems. AUF implied that the o rgdon is one of the &ties 

involved in the well-orchestrakd effort to arouse customer complaints. AUF further argued that 

Pasco County witness Mariano’s recommendation to reduce the Utility’s return on equity (ROE) 

follows nearly verbatim the remunicipalization strategy set forth by Food & Water Watch. AUF 

stated in its brief that an OPC witness described the Utility to a Food & Water Watch 

representative as using its position to steal from customers. 

Referencing AUF witness Chambers’ acknowledgement that an EWQ is closed after only 

one attempt to return a customer’s caU, OPC argued in its brief that the Utility’s failure to make 

more than one attempt to contact a customer confirms customer testimony regarding difficulties 

in getting problems resolved OPC further argued that customers have complained that when 

they are. able to reach a CSR, CSRs are. rude. With regad to witness chambers’ testimony that 

during at least one call that she reviewed, the CSR could have been more helpful, OPC argued 

that she made a generic sampling of some of the customers who testified 

OPC witness Dmukes testijied that customer service includes communication with 

customers, the speed and courtesy of responding to customer questions, and customers’ 

&idaction with the resolution of their con- or problems. OPC witness Poucher concluded, 

however, that while utilities sometimes make customers happy and sometimes do not, &omers 

generally live with the results. Witness Dismukes also recognized that AUF has implemented 

several customer service improvement measures, which include the fodon of CART, 

implementation of EWQs to hade escalated calls, development of a detailed Supervisor Audit, 

auditing of all of its replaced meters, standadkition of its service order processing system for 

field technicians, refjnement of on-site meter and bench test procedures, and provision of an 

informational brochure for seasonal customers. 

OPC witness Vandiver argued that AUF’s quality of customer service is uniformly 

unsatisfactory and that customers often unable to tallc with someone who is responsive to 

their concerns. Further, OPC witness Poucher te&ied that many AUF customers feel that their 

complaints over the past years have fallen on deaf ears. He stated that he would not be surprised 

by reduced attendance at customer hearings and fewer complaints and correspondence filed with 

this Commission because customers are tired of complaining without seeing results. We believe 

that witness Poucher’s assertion that customers* complaints have fallen on deaf ears is 

contradicted by OPC witness Dmukes’ recognition of the many service improvement measures 

implemented by AUF. 

Witness Poucher admitted that some of the Statistics provided in AUF’s Phase II 

Monitoriug reports indicate improvement. He argued that prior to 2010, the Utility had a 

tremendous problem with inammte or nonexistent meter reading and estimated bills, and there 

was little evidence to suggest that the Utility even cared. He acknowledged, however, that the 

Utility’s current use of digital meters caused complaints of estimated bills to decline 

signi6canty. He also acknowledged that the Utility’s reports indicate improvement in call



PAGE 32 

center performance, although he cautioned that these reports cau be deceivhg since AUF did not 

consider certain types of data. Witness Poucher concluded that the best way to hd out if 

customers are satisfied is to ask them ifthey are. 

Witness Vaudiver presented her analysis of biUing and service comphhts Sed with this 

Commission during the period 2007-2010. This analysis, which confirmed AUF witness 

chambers’ testimony, revealed that the total number of complaints decreased by 24 percent 

during the period 2007-2010. Witness Vaudiver claimed that despite the fact that AUF was 

notified by our 080121-WS Final Order that it would be under even more Scrutiny, her analysis 

of customer complaints reflects an increase of six percent in 2009. She acknowledged that the 

number of complaints decreased by 19 percent in 2010. However, she argued that since AUF 

hew it would be sling a rate case and would be under increased scrutiny by this Commission 

the Utility should have put extra e&rt into the services it provides to its customers. We believe 

that the Utility’s improvements to many facets of its customer service are supported by 

substantial record testimony and evidence. In addition, witness Vandiver acknowledged a 24 

percent decrease in complaints during the period 2007-2010, and witness Dismukes 

acknowledged AUF’s service improvement measures. 

white we acknowledge AAI‘s efforts to improve its customer service procedures, we 

believe AAI could further improve its escalated call process by modifying its prucedures to 

require more than one attempt to contact a customer before closing the EWQ. This would be 

particularly helpful in cases where the AAI Supervisor is unable to leave a message on the first 

call because the customer is not home and does not have an answerhg machine. We note that 

AUF’s Florida Delinquency Process includes two attempts to make a reminder telephone call to 

customers before disconnection. We enmurage AAI to consider a similar m&cation to its 

escalated call procedures to include a minimum of two or three attempts to call a customer before 

closing the EWQ. 

OPC witness Poucher testified that he reviewed the 210 customer complaints filed with 

this Commission during the period January 1,2010, through July 28, 2011, to determine any 

error or fault on AUF’s parL He asserted that seldom does any complaint in the Commission’s 

files reflect a rule violation bemuse this Commission has so few rules regarding customer 

service, especially for water and wastewater companies. Thus, his analysis did not take into 

consideration whether the Commission determined tbat a rule violation occurred. Witness 

Poucher acknowledged, however, that his analysis of each complaint did not include discussion 

of the complaint with the respective customer, OUT M, or the Utility. 

Witness Poucher alleged that our complajnt files represent the tip of the iceberg for AUF 

because the majority of complaints are held in the Utility’s own records, which are di€Jicult, if 

not impossible, to recover. Regarding the nature of customers’ calls to AUF’s call center, he 

also suggested that the real indicator of the volume of complaints against the Utility is the 

number of calls received at the Utility’s call center. He testified that Florida customers’ calls 

have averaged more than 5,000 per month, while our complaint files indicate 210 complaints 

received during the period January 1,2010, through July 28,201 1; and Florida customers’ calls 

c-tly average more than 60,000 each year, or approximately 3 calls per customer per year.



PAGE 33 

Given his cham%^&^ . ’on of the cornplaints in our files, witness Poucher indicated that he 

accepts these complaints as representative of the thousands of complaints received by the Utility 

each year. However, he recognized that a majority of the call center’s incomhg calls are not 

complaints, as determined by us. In addition, he acknowledged that our files are valuable 

became our database is manageable and contains fairly reliable data, whereas he would be 

unable. to analyze the complaints in AUF’s mrds due to theii volume. He deemed our files an 

excellent source to target corrective action where it will do the most good 

In response to AUF witness Chambers’ testimony regarding a well-orchem effort by 

interested parties and other non-party special interest groups to encourage customers to complain 

against Am, witness Poucher challenged that his review of complaints revealed absolutely no 

evidence that customers filed false complaints. He asserted that during AUF’s and OPC’s 

meetings with customer representatives during the Phase II MonitOring Program, both the Utility 

and OPC encouraged customers to file water qualify complaints so that AUF could address those 

issues. He further stated that OPC encourages customers to participate and pvide their ;npUt in 

a rate case proceeding, regardless of whether customers suppoa or oppose the Utility‘s petition. 

He concluded that AUF’s poor service and high rates for an inferior product have permadeed 

customers to organize in order to seek relief, and he suggested that FlowFlorida was developed 

as a result of those very issues. 

OPC witness Poucher denied involvement with Food 62 Water Watch He M e r denied 

any knowledge that Pasco County witness Mariano was following FlowFlorida’s -gy by 

stating that if AUF’s ROE was reduced, its rates would be dramatically affected and the Utility 

would quickly “come to the table” with regard to remunicipalization of its local systems. 

Witness Poucher further testified regardiug some Pasco County customers’ desire for the 

Utility to sell its local systems to FGUA or to Pasco County in order to receive the County’s 

rates. He admitted that he had not researched whether these customers would, in fact, be chged 

the County’s rates if these systems were acquired by FGUA Specifically, witness Poucher 

stated that that is not part of OPC‘s job because FGUA is not regulated by us and that he is not 

responsible for maDaging customers’ expectations as it relates to a potential acquisition of AUF’s 

local systems by FGUA. Witness Poucher further stated that he did not speak to any Pasco 

County Customers regarding such an acquisition by any entity. 

Pasco County argued in its brief that AUF’s response to customer complaints is to tell 

customers there are no problems. Despite 25 comments regarding poor water quality at the New 

Port Richey service hearing and many more quality complaints in written petitions. AUF 

responded with one paragraph of testimony stating that no odor or water quality issues were 

found. Further, Pasco County alleged that over the past few years, the County has received 

numerous complaints h m AUF customers regarding poor service, poor water quality, and 

exorbitant rates. The County intervened in this action in an attempt to obtain some relief for the 

many fmstmkd customers. In response to AUF’s implication that thm would not have been so 

many customers complaining but for the actions of the County and other Intervenors, Pasco 

County stated that it did encourage customers to express their complaints, and the Utility’s 

President also encouraged customers to speak at the New Port Richey service hearing and likely



PAGE 34 

at all of the seMce hearings. Further, Pasco County asserted that with so many customers 

hurting from the high rates and poor water quality, they did not need any encouragement to voice 

their concerns. 

With regad to several utilities in Pasco County that were acquired by FGUA, witness 

Mariauo acknowledged that customers of these utilities were not chged Pasco County's rates 

following the acquisitions. He c Hed that customers' new rates are based upon the acquisition 

price of the utility. He further acknowledged that an FGUA customer with a quality of seMce 

issue must address that issue with FGUA or the Pasco County CommissiOn; and that the FGUA 

board consists of no elected officials, although a representative of the Board of County 

Commissioners sits on that board. Witness Mariano asserted that since FGUA's acquisitions of 

each of those utilitia, the Pasco County Commission has not received a single quality of Service 

complaint. 

In its brief, the AG explained that customers testified that they had made great sacrifices 

to come water, including not bathing daily, not participating in activities that would reqk 

them to bathe, not flushing toilets after each use, saving water from showers to flush toilets, and 

not having guests because they could not afford additional water usage. Customers also tesfified 

about fresuent replacement of water heatas, faucets, and appliances due to poor water qdty. 

With regard to customer service, the AG adopted OPC's statement and added that the use of an 

independent verifier, which AUF conceded it does not currently employ, would assist the Utility 

in identifying areas of concern and improving customer seMce, resulting in decreased costs and 

satisfied customers who feel their complaints are taken seriously. The AG concluded that the 

poor water quality has impacted the customers, small business owners, and communities served 

by AUF. As a result of the poor water quality and the high rates, some customers have vacated 

their rental properties while others have been unable to sell their homes and move because 

potential buyers do not want to own homes in areas served by AUF. With respect to the AG's 

encouragement of AUF's use of an independent vedier to review customer calls, we note that 

AUF witness Chambers' testified that she has found our Mto be helpful, knowledgeable, and a 

good resource. She concluded that if AUF needed to find an objective, unbiased third party, our 

staff would be a good choice. In addition, regarding the AG's argument that AUF's Service has 

prevented residents h m selling their homes, we note that the AG has failed to consider the role 

of Florida's statewide decline in property values and high level of home foreclosures, as 

demomtrated by the Florida Legislature Office of Economic and Demographic Research 

In response to AUF witness Chambers' statement regarding a well-orcheshated effort by 

interested parties and other non-party special interest groups to encourage customers to complain 

against AUF, the AG asked witness Chambers whether OPC asked service hearing witnesses to 

testify to their experiences with AUF, even if those experiences were positive. Witness 

Chambers conceded that that was true and acbowledged that OPC's statement did not sound 

like an encouragement to complain. 

In her testimony, staffwitness Hicks noted that CATS was reviewed for complaints fled 

against AUF under Rule 25-22.032, F.A.C. Approximately 400 complaints were received from 

January 1, 2009, through September 30, 2011. An analysis of these complaints revealed 71

ORDFR NO. PSC-12-0102-FOF-WS 


PAGE 35 

percent concerned billing issues, and the remaining 29 percent dealt with quality of service 

issues. Of the 400 complaints, 46 or 11 percent were determined to be apparent violations of 

Commission rules. AUF received 21 apparent rule violations in 2009, 18 apparent rule 

violations in 20 10, and as of September 3 1,20 1 1, AUF has received 7 apparent rule violations. 

As of December 7,201 1, we have received approximately 558 letters and emails in this 

docket in which Customers expressed opposition to the rate increase and frustration regarding the 

lifestyle changes that increased rates would further necessitate. Customers described their 

overall dissatisfaction with the level of service they receive and the quality of the water. They 

also asked specific questions about our rate case process as it relates to the instant case. 

Comments were also submitted by several local and state government officials expressing 

opposition to the Utility’s application for a rate increase, including letters h m state Legislators, 

Pasco County Commissioners, and Polk County Commissioners. In addition, more than 900 

signatures on petitions were filed with this Commission on April 26 and May 5,2011, by two 

Legislators who represent customers in Pasco County. The Polk County Commission filed with 

this Commission its Resolution No. 10-174, stating its objection to the instant rate case 

proceeding. 

c. Billing hoblems 

AUF, OPC, and YES wilnesses provided testimony regarding customers’ billing issues, 

including concerns regarding backbilling, high bills, online payment options, leak adjustments, 

and shut-off due to nonpayment of bills. 

In its brief, AUF noted that it continues to take steps to address billing and payment 

issues raised by customers in the last rate case, and in customer meetings and service hearings in 

the instaut case. As noted in AUF’s brief, to better educate seasonal customers of various 

programs available, the Utility sends an informational brochure to customers encouraging them 

to contact the call center when they leave the state so that their account is properly noted as 

seasonal. AUF discussed the Utility’s practice of offering seasonal customers the option to 

postpone payment of base facility charges while the customer is residing outside ofTlorida. 

With respect to the length of time covered by a customer’s backbill, AUF witness 

Chambers claimed that there have been rare occasions in which AUF has, through human error, 

billed a customer for a longer period of time than 12 months. Witness Chambers then stated that 

AUF put in a new process to ensure that AUF does not backbill any customers for longer than 

365 days. The new process, which went into service in November 201 1, is an automated coding 

system that will now alert a CSR to review the acwunt in order to ensure that a bill exceding 

365 days is not presented to a customer. Zero consumption reads also make up a portion of the 

backbilliig issue. To address this issue, AUF has created a monthly zero consumption report, 

which reports accounts with zem consumption for more than six months. Regarding the 

calculation of backbills, witness Cbambers stated that backbills are calculated using a daily 

average methodology.



PAGE 36 

In an attempt to mitigate high bills, AUF has implemented a process in which an alert 

message is placed on a customer’s bill if it is a high bill or the bill covers a period longer than 35 

days. The high bill alert prompts the customer to invdgate for potential leaks and visit AWs 

website for more detailed information. The long-period bill alert advises the customer that they 

mu request a payment arraugement upon contacting the call center. 

With regard to leak and pool adjustments provided to customers, AUF witness Chambers 

testified that the Utility developed a water conservation and leak detection infodonal section 

on their website. 

According to AUF witness Chambers, in order to address customers’ requests for online 

payment options, the Utility has developed a new program, Aqua Online that allows customers to 

view bills online for he. and provides an option to pay bils online as well. The payment option 

is provided by a third-party vendor, Speedpay, which collects a convenience fee of $3.20 for 

each payment a customer makes online. AUF’s Aqua Online bill insert informs customers of the 

paperless billing options, the availabiity of the program at no cost to the customers, and the 

immediate access to current and past bills, all of which allow ease of payment 

For a utility to shut-off service for non-payment, Rule 25-30.320, F.A.C., requires that 

the utility provide five working days’ written notice, separate and apart from a bill for service. 

AUF witness Chambers provided the Utility’s Florida Delinquency Process Summary (FDPS). 

Under AUF’s FDPS policy, a customer is provided at least ten days’ advance written notice 

indicating that service will be discontinued if payment is not received Witness Chambers 

explained that AUF also attempts to cal1 a customer prior to discontinuing seMce, which is not 

required by Commission rules. In addition to attempting to contact a customer by telephone, the 

Utility’s policy is to proceed with seMce termjnation only when the customer’s outstanding 

balance exceeds $100. Where service is terminated for failure to pay, AUF attempts to reinstate 

service within the next business day following the date of payment codkmation. 

With regard to AUF’s billing practices related to seasonal customers, OPC noted in its 

brief that although AUF provides a long-period bill message on the fitst bill received to allow a 

customer to pay over a longer period of time, this practice contributes to backbilling and high bill 

problems complained of by customers. 

OPC witness Poucher testified that the most Sreguent cornplaints against AUF relate to 

billing issues. He asserted that the volume of backbw complaints today should not be so 

large as a result of AUF’s installation of new meters that reduced ~ccurrence~ of estimated reads 

and largely eliminated human error h m the meter reading process. He stated that complaints 

have persisted due to AUF’s improper handling of complaints and in&ective procedures. In 

addition, AUF witness Chambers and OPC witness Poucher disaged with respect to the length 

of time a customer is backbilled OPC witness Pouch countered that according to our 

complaint rtmrds, 16 customers were backbilled for greater than 365 days. YES witness Kurz 

also provided testimony re- to specific customer complaints about backbw.



PAGE 37 

OPC witness Poucher stated that 31 percent of complaints filed with this Commission 

against AUF deal with UIlllsUBuy high bills. He stated that many of these cases can be tracked 

down to billing errors and meter read errurs, while other billing emrs can be traced to leaks at 

the customer’s premises. Witness Poucher stated that the Utility does not appear to have any 

plan or procedure to deal with the high bill issue other than to suggest that the customer check 

for leaks and make sure that the flapper in the toilet is operational or to conduct an expensive 

meter check at the customer’s premises. 

With respect to AUF’s leak and pool adjustments, OPC witness Poucher conceded that 

where it can be determined that there was a leak at the customer’s premises and the customer 

pays to fix the leak, the company provides a leak adjustment to the bid. 

3. Aesthetics 

AUF witness Luitweiler testified that a downward trend in the number of water quality 

complaints h m customers in the systems addressed by the Utility’s 2008 Original Aesthetic 

Program shows that customers are seeing the benefits of the improvements being made. Further, 

he explained that AUF is developing the next tier of systems for the m nd phase of its aesthetic 

improvement project, which will include the Arredondo Fanns water system, among others. 

Witness Luitweiler concluded that AUF’s efforts to improve aesthetic water quality clearly 

demonstrate its commitment to customer service and to addressing customer satisfaction. 

Arredondo Farms is a mobile home community located in GainesviUe that receives water 

and wastewater services from AUF. As the owner and operator of Arredondo Farms, YES 

provides aEordable rental housing to its residents and is also an AUF customer. In its briet 

AUF characterized the community as one in which the resident population has been largely 

transient for years, which results in a large number of moveins and move-outs and, in turn, 

creates a greater number of service orders and presents billing challenges. AUF further 

confirmed in its brief that the system has been included in the second phase of the Utility’s 

aesthetic improvement project. 

AUF witness Luitweiler testified that the U.S. Environmental Protection Agency @PA) 

National Secondary Drinking Water Regulations set non-mandatory Secondary Maximum 

Con taminant Levels (SMCLs) for constituents based on aesthetic considerations, such as taste, 

color, and odor. EPA and DEP do not enforce these SMCLs. Such constituents are not 

considered to present a risk to human health at or below the SMCL. He acknowledged that the 

raw water source for some of AWs water systems contains naturally occurring constituents, 

such as iron and sulfides, which at times can cause undesirable color, taste, and odor. Some of 

these raw water sources also contain calcium and other minerals, which can lead to hard water. 

He asserted that these constituents can often be &cult and expensive to remove. 

Witness Luitweiler referend AUF’s Original Aesthetic Program developed to address 

customer comments related to aesthetic water quality provided during the 2008 rate case. As a 

result of this program, AUF identified seven water systems where customers had expressed the 

most concern regarding aesthetic water quality issues, including Lake Josephine, Leisure Lakes,



PAGE 38 

Sebring Lakes, Rosalie Oaks, Tangerine, Tomoka View, and Zephyr Shores. The scope and 

results of this aesthetic water quality improvement initiative are set forth in detail in AUF’s Final 

Phase II Quality of Service Monitoring Report dated February 28,2011 vinal Report). Witness 

Luitweiler testi6ed that aesthetic water quality improvements have been completed at the Rosalie 

Oaks (flushing hydrants and blowof&), Zephyr Shores (flushing hydrants, blowoffs, and 

installation of sequestration treatment), Tangerine (pipe replacement and looping, and 

installation of sequestration treatment) aud Tomoka View (chloramixdon) systems. Work on 

pemiUhg and installation of A w e 

treatment to remove hydrogen sulfide is currently ongoing 

at Leisure Lakes, Lake Josephine, and Sebring Lakes. Additionally, Lake Josephine and Sebring 

Lakes were intexwmected in 2010 to improve supply, pressure, and flushing. Improved 

distribution system monitoring and flushing were also implemented. Witness Luitweiler stated 

that by trackhg AUF’s water quality complaints, he saw convincing evidence that the water 

quality bas improved. He firher believe that where AUF has made treatment and flushing 

protocol changes, substantial and demodle improvements in water quality have been 

achieved. 

According to Witness Luitweiler, AUF intends to continue to address aesthetic water 

quality issues beyond the seven systems discussed above. In selecting the systems to be included 

in the first phase of aesthetic water quality improvements, priority was given to systems with 

SMCL exceedences for taste. and odor (due mainly to hydrogen suEde, iron, and mauganese). 

Priority was also given to systems that could have issues with primary drinking water standards. 

While work on some of the projects in the first phase continues, witness Luitweiler announced 

that AUF is developing the next tier of systems to be included in the second phase of the 

aesthetic improvement project The Arredondo Farms, Hermit’s Cove, River Grove, and 

Arredondo Estates water systems have been selected for this second phase. 

Witness Luitweiler pointed out that Arredondo Farms had no SMCL exceedences and no 

issues related to Primary standards. Thus, it was placed in the second tier of systems to be 

considered for aesthetic improvements. The witness contended that the quality of AUF’s product 

at the Arredondo Farms water system is good, as is the operational condition of that system. 

Furthermore, witness Luitweiler stated that AUF has made, and continues to make, concerted 

attempts to address customer satisfixtion at the Arredondo Farms system. Witness Luitweiler 

admitted that Arredondo Farms’ water is hard, but not exceptionally bard for Florida He argued 

that we have consistently recognized that it is not unusual for Florida water utilities to experience 

water hardness issues, and we have not taken punitive actions against utilities that do. The 

witness noted that in the 1996 rate case involving Arredondo Farms (which was then owned by 

Arredondo Utility Corporation), we found, in Order No. PSC-96-0728-FOF-WS,” that while the 

water at the system was hard, it did not present a health hazard. We went on to conclude that the 

treated water provided by Arredondo Utility met or exceeded all requirements for safe drinking 

water and that the utility had satisfactory water quality. We also wamed in that Order that a 

system-level solution to the hard water issue at Arredondo Farms would not be cost-effective or 

prudent, and that the cost to make such improvements would be passed on to the customers 

” Issued May 30,1996, in Docket No. 95 l234-WS, In re: Amlicatim of Arredondo Utilitv Conro ration. Jnc.. for a 

staff-arsisted rate case m Alachua County, p. 3.

ORDER NO. PSC- 12-0102-FOF-WS 


PAGE 39 

through the& rates. We noted at that time that customers who found the scaling problem to be 

intolerable had other options. They could either have a local water softening company install a 

water soikning unit at a variable price, or they could purchase a whole house filter. AUF 

maintained that thw is no evidentiary basis for us to reverse our previous decision and conclude 

otherwise in the instant case. 

In consideration of system-level alternatives to address the hardness at Arredondo Farms, 

witness Luitweiler indicated that options under consideration currently include softening 

processes other than lime softenin& which is still very expensive, adding a sequestering agent 

tailored to address the effects of calcium and megnesium, or purchasing water h m Gainesville 

Regional Utilities. He stated that AUF’s ultimate goal is to find a balanced solution that will 

mardmize benefits to customers and minimize upward pressure on rates. AUF does not currently 

have a budget for a specific project because, as witness Luitweiler pointed out, it is premature to 

determine exactly what actions AUF is going to take. Witness Luitweiler acknowledged that in a 

future rate case, AUF may seek to recover the costs to address the hardness issues and other 

secondary issues. 

With regard to Amdondo Farms, AUF suggested that record evidence indicates that the 

community has experienced a high turnover rate of residents well before YES acquired the 

community in January 2008. AUF witness chambers testified that due to the high volume of 

tumover, the Utility finds it difficult to determine the true customer of record, which then leads 

to the issuance of long-bills. Further, Widence related to an AUF study of move-out data for 

Arredondo Farms from October 2008 through September 201 1 was introduced, and AUF witness 

Rendell afj5m1ed that the study indicated that the number of move-outs in the Community were 

higher in each of the two months preceding AUF’s implementation of PAA rates than in each of 

the two months following the same. Specifically, there were 23 move-outs in June 201 1 and 22 

move-outs in July 2011. The PAA rates were implemented in August 2011. There were 16 

move-outs in August 201 1 and 18 move-outs in September 201 1. 

Further, AUF witness Rendell and YES witnesses Harpin and Kurz disagreed with 

respect to the impact of the Utility’s quality of seMce on the real estate value of property in the 

community. Witness Rendell testified that a presentation made by the Florida Legislature Office 

of Economic and Demographic Research in October 201 1 shows that the entire state of Florida is 

currently experiencing a decline in property value and a very high level of home foreclosures. 

He asserted that the presentation clearly shows that the decline in the housing market is a 

Statewide phenomenon which has nothing to do with AUF’s rates. The presentation actually 

shows that the counties in Florida with the highest number of loans in foreclosure occur in Dade, 

Osceola and St. Lucie Counties, where AUF does not own or operate any water or wastewater 

systems. Witness Rendell asserted that there is no causal relationship between the real estate 

crash and AUF’s rates. 

In response to a Commissioner’s question, AUF witness Rendell testified that Arredondo 

Farms’ customefi reap a tremendous benefit by beii AUF customers rather than customers of a 

smaU local utility. He suggested that there’s a prolifedon of hundreds of small systems 

throughout the Staie of Florida In an effort to contain this proliferaton of small systems,



PAGE 40 

witness Rendell explained, this Commission considered consolidation of small systems. 

Consolidation allows for synergies between a utility and companies that provide products and 

services, which then allows the utility to provide service at a reduced cost, sharing Of PeISOMel, 

and a greater number of customers over which to spread costs. Witness Rendell suggested that 

AUF is better equipped than a small utility to attract sualified personnel and to obtain Snancing 

in order to address compliance concerns. Thus, he concluded that AUF customers do not 

experience as significant an impact as custom& of a small utility when AUF receives a rate 

inclrase. 

OPC witness Dismukes cited the testimony of numerous customers who expressed their 

complaints about water quality and objections to any rate increase. She stated that customers 

complained about their inabiity to collsume the water, health wncems, and the additional 

expenses incurred unjustly due to purchases of bottled water and water flters. Furlher, witness 

Dismukes te.sti6ed that customas have found theii use of the Utility’s water to be inconvenient 

and embarrassing. OPC witness Vandiver also emphasized that customers find it objectionable 

to use the water for cleaning and bathing. In some systems, she further alleged, customers have 

found the odors emanating from the wastewater plant and inadequate disposal of wastewater to 

be objectionable. 

YES witness Kurz referenced complaints &om Arredondo Farms residents reted to, 

among other issues, the quality of the water. Several residents clahed that: the water often 

smells like bleach; they do not consume the water due to its foul taste; the water is hard and 

requires special cleaning agents to remove stains from surfaces; they purchase bottled water for 

consumption; they use water filtration systems; they boil water prior to use; the water has made 

their children ill, buildup of sand and calcium in water lines has caused low pressure and 

necessitated cleaning and replacement of lines, water heaters, and other appliances; and the lack 

of fluoride in the water has caused dental issues. Residents purchase water for many household 

uses, such as food and kerage preparation, pet care and consumption, personal hygiene, and 

general consumption. Witness Kurz contended that residents do not feel they are receivkg a 

quality product, given AUF’s rates and the expenses they bear in purchasing bottled water and 

resolvhg maintenance issues. Additionally, she referenced complaints of high bills at vacant 

homes, high bills due to backbilling, and poor customer service from AUF’s call center. 

YES witness Starling testified with respect to several issues encountered by Arredondo 

Farms and its residents, including a main break that flooded a community playground, the 

removal or demolition of mobile homes by homeowners due to their inability to continue 

residing there or their inability to sell their homes, sediment accumulation in water heaters and 

damaged heater elements, sediment accumulation in water limes that result in little to no pressure, 

and sewer backup incidents. She provided photographs to emphasii the impact of these issues 

on the community. She further confirmed that she has encountered obstacles in her attempts to 

assist residents with their AUF-related issues, such as dif6culty in establishing payment plans, 

rude CSRs, and AUF’s lack of a StreamLined customer service process that causes calls to be. 

transferred among departments in order to achieve a resolution. Similarly, witness Km 

described that when she worked on a customer’s issue, she contacted the Utility’s call center, 

spoke with members of Am’s managemat team on several occasions, and was repeatedly



PAGE 41 

redirected back to the call center. Witness Kun also provided similar testimony with respect to 

hardness and sediment buildup, emphasii that the costs of plumbing maintenan ce are borne 

by residents and YES. 

Witness Kurz also testified that when YES represeqtatives have contacted AUF’s call 

center, CSRs have behaved very unprofessionally and have offered no resolutions. She 

referenced instances of interactions with CSRs and characterized that being intentionally put on 

hold without returning to the line as ‘%eq rude.” Witness Kurz concluded that “the customer 

service provided by AUF is rude and con-.” However, she also suggested that CSRs 

who are not properly equipped to address issues specific to particular service areas may 

experience a high volume of calls fium customers in those areas and, in turn, may experience 

fiwtmiior~ In combination with customers’ frustration that CSRs cannot address water quality 

issues to the customers’ satisfaction, this creates a tense environment in which customers’ 

grievances continue to remain unresolved. 

YES witness Kurz alleged that, despite the counfless how that YES staff spent 

attempting to resolve customers’ issues and obtain responses fium members of AUF’s 

management team, it was not until YES intervened in the instant case that AUF demonsbated 

that it was concerned about these issues. In addition, she ssserted that when members of AUF’s 

management team were responsive, their solutions were passive rather than cooperative, and they 

did not seem to desire to identify the root causes of the billing issues. Witness Kurz argued that 

YES’ earnest attempts to obtain AUF’s attention were futile until YES representatives testified at 

the Gainesville service hearing. Their testimony redted in communication &om the Utility in 

order to begin working on the relevant issues, and discussions of creating a YES/AUF joint task 

force began. 

According to witness Kun, a YES/AUF joint task force was formed some time after the 

Gainesville service hearing. She noted that members of the task force include AUF’s President, 

Rick Fox; AUF and AAI employees Troy Rendell and Susan Chambers; AUF’s Counsel, 

Kimberly Joyce; and YES employees Shawn Harpii Jeremy Gray, MaUory Starling, and herself. 

AUF witnesses Chambers and Rendell con6rmed that the Utility bas been actively participating 

in the task force. Witness Kurz test5ed that approximately three meetings have been held with 

the primary goal to reduce billing errors. One of the task force’s achievements has been an 

improvement in billing errors related to the new customer process. Witness Kurz stated that 

YES has implemented an AUF-genemtd application for utility service, which has given the 

Utility greater confidence in accurate establishment of customer accounts. 

Witness Kurz acknowledged that progress has been made through the YES/AUF joint 

task force. She also recognized some cooperation issues, citing some departure h m the 

procedures agreed upon by all members. A continued focus on the issues at hand was needed, 

she suggested. Witness Kurz also mentioned that the participants in the task force include upper 

level CSRs, some of which “have not been completely helpful with Mallory Sta~ling,” who 

assists residents with theii AUF-related issues on a daily basis.



PAGE 42 

YES witness Harpin asserted that Am’s quality of service and rates have led to a 

massive number of vacancies in this rental community and encumbered the affordable housing 

market in Arredondo Farms; and they have negatively impacted YES’ business by causing YES 

to incur increased marketing expenses and lost revenues after residents vacate their homes. 

Witness Harpii asserted that the real estate value of property in the community is negatively 

impacted by Am’s quality of service and the perception of poor water quality. Additionally, 

witness Harpin noted that YES has incurred in& payroll and maintenan ce expemes for the 

sole purpose of m&ging the water issues in Arredondo Farms. 

YES witness Gray also asserted that AUF’s rates have severely impacted Arredondo 

Fanns. He further noted that the Utility’s 93 percent rate increase in 2009 has resulted in 

customer bills of approximately $125 per month, which represents nearly 50 percent-of YES’ 

monthly lot rental fee. Accordiig to witness Gray, the Utility’s rates have forced residents to 

leave their homes, with 52 percent of move-outs citing their water bills as the reason for moving. 

With an average of four moveouts per month since January 2011, witness Gray claimed that 

approximately 32 residents had vacated their homes as of September 12,2011. Additionally, he 

stated that YES incurs $1,998 per month to rekbish, remarket, and relist that home to attract a 

new resident, which has amounted to approximately $64,000 in expenses year-todak. 

According to witness Gray, these figures do not account for the amounts of lost rental income 

and rent concessions. He concluded that the Utility’s rates are putting YES out of the affordable 

housing market and that the Utility’s growing quality of service problems have increased 

massive write-offs, increased turnover costs, impacted resident retention, increased payroll 

expense, and redd the rent amount YES can charge. YES witness K w provided similar 

comments regarding Am’s impact on YES’ busiiess. 

YES witness Green testified that he is responsible for maintaining the more than 100 

rental homes in Arredondo Farms. He alleged that due to Am’s poor response and the 

community’s water problems, YES bas taken proactive measures in solving and attempting to 

avoid these problems. Witness Green explained that YES established a program called Gold 

Key Service, in which maintenance personnel conduct monthly inspections of the community’s 

homes. Wiiness Harpin added that technicians ensure there are no leaks in the home that would 

result in a high water bill due to AUF’s rate tiers. Technicians replace plumbing lines that 

provide little to no water pressure due to sediment and calcium build up hm the poor water 

quality; replace toilet parts that no longer fimction due to sediment and cause the toilet to run, 

leading to high bills; and replace water heater elements that have corroded due to calcification as 

a result of the water. Witness Green asserted that he has retrieved at least five gallons of 

sediment fiom water lines at a particular home, replaced water heater elements, and replaced 

those elements again within two weeks as a result of six to ten inches of sediment buildup in the 

lines. He further stated that he has replaced showerheads, supply lines, shutoff valves, and 

faucets inside a home, all of which has become an uncontrollable cost issue for YES. Leak 

detection and meter check services are also provided to residents as a part of the Gold Key 

Service program According to witness Green, maintenance personnel conduct weekly meter 

readings for all lots and ensure that meters are functioning correctly. In order to maintain 

residents, he noted they repair any problems identi6ed at YES’ cost



PAGE 43 

AUF presented evidence from the website Homesfacts.com, a service that provides due 

diligence information to potentid buyers and renters regarding a particular community. The 

Homefacts.com website indicated that Arredondo Farms’ water quality is rated as 9.8 out of 10. 

With respect to this evidence, YES witness Harpin stated that the exhiiit did not show which 

chemicals were tested and found, which chemicals were tested and not found, and which 

chemicals were not tested. He also asserted that he was not familiar with Homefacts.com’s 

rating scale. However, he admitted that Homefacts.com’s water quality rating of 9.8 out of 10 

would favorably impact a potential resident’s decision to move into Arredondo Farms. 

4. Prior Monitoring 

As previously discussed, AUF and OPC disagreed regarding the outcome of the joinfly 

proposed Phase 11 Monitoring Plan approved by us in OUT May 2010 Order. AUF witness 

Chamkrs provided testimony regarding AAI’s caU center perfomce and operations. AUF 

submitted seven monthly reports that showed two to five years of data for company-wide and 

Florida-specifuc performance measurements taken from January 2007 through October 2011. 

Utility management uses the reports internally to: asartam . whether the Utility is meeting its 

targeted service performance levels, understad recent performauce, identify adverse trends, 

track pending service orders, and ensure that service order requests are properly addressed as 

soon as practicable. Witness Chambers testified that the data gathered in these reports during the 

Phase 11 monitoring period was consistent with AUF’s expectations, and there did not appear to 

be abnormal variances or trends for Florida calls. 

A comparison of performance data horn Jarluary 2007 through OctoLm 201 1 indicates 

that AAI has generall maintained an improved level of performauce since October 2008, a 

period of three years.” Witness Chambers testiiied that the Utility consistently met most of its 

seKimposed service goals with some minor exceptions. In general, the exceptions were 

explained by AUF and linked to known causes, such as a water main break, hurricane, or impact 

of move idmove outs and well a~munts.~~ Also, the number of accouflts affected by the 

exceptions were quite low, sometimes as few as one or two accounts. 

Following the end of the Phase II monitoring period, additional improvements were noted 

in January 2011 through October 2011. On average, AAI’s three call centers answered over 

87,000 calls per month with approximately 5,300 calls, or 6.0 percent, placed by Florida 

customers. Although AAI’s total calls increased in 2011, Florida calls decreased by an average 

of 112 calls per month In addition, the percentage of Florida calls related to seMce issues, such 

as water outages, high bills, and service line leaks, decreased from 12.6 percent during Phase II 

to 10.5 percent during 2011, a reduction of 2.1 percent. The remaining calls were primarily 

informational in nature, with nearly 85 percent of all calls handled through AAI‘s Interactive 

I’ A detailed +is of the Phase If monitoring reports through December 2010 is provided m Order No. PSC-11- 

0256-PA4-WS. issued June 13,201 1, m tbis docket Attachment 2. 

l9 WeU accounts are AUF intanal ammts for which meter nadiogs are obtained and xnwmption is tracked, but 

no bills are issued However, because the accounts are behg tracked, they will appear on the unbilled report dming 

any months for wbich a meter reading is not obtained, thereby mcreasing the percentage of active accounts not 

billed.



PAGE 44 

Voice Response system. In fact, over 60 percent of Florida calls (an average of 3,200 calls per 

month), were for routine move ins/move outs, pay by phondSpeedPay, account balance 

verification, and customer accouui changes, which consistently rauked as the top four reawns for 

calls. Also, on average, calls to CSRs were answered in 40 seconds, and complaints liled 

directly with AAI were closed in five days. 

Regarding service complaints, witness Chambers testified that any call related to a water 

quality complaint, a boil water notice, or an emergency repair is immediately addressed by a 

customer service technician hugh the issuance of a service order. AUF dves to address 

customer collcems within 7 to 14 days of the service orders, with 7 days being the goal. Witness 

Chambers testified that the overwhelming majority of service order requests were addressed 

within those timehes, and that Phase II monitoring reports show that AUF vigilantly tracks, and 

consistent~y follows through on, service order request^.^ 

Witness Chambers also discussed several procedures related to operation of AAI's call 

centers, including reviewing call center service metrics, determining stafhg requirements, 

providing CSR tmining, and conducting CSR performance evaluations. AAI previously 

conducted customer research to gain customer feedback regarding call wait times and expanded 

call center service hours. The survey indicated that only 18 percent of survey participants 

answered that their call wait times were longer than expected, and although 82 percent of 

respondents were in favor of extending the call center hours to include late night hours, a 

weekend day, or 24 hod7 day operation, only 20 percent were willing to pay for the increased 

CSR hours. In addition, AAI reviews its call center metriw on an annual basis to determine if 

changes are needed. Witness Chambers testified that AAI tries to find a balance between metrics 

that are cost-effective and address customer service. 

Witness Chambers also provided testimony to illustrate AAI's proactive approach to staff 

its call centers to accommodate increased call volumes. The average number of CSRs working 

per day at AAI's call centers increased from approximately 42 CSRs to nearly 63 CSRs between 

January 2007 and January 2008, representing a 50 pefrent increase. During that time, AAI 

converted its customers to one customer information system, and increased the number of 

customers from 704,150 to 849,027. W~tness Chambers testified that AAI increased the number 

of CSRs in response to the increased call volumes and number of customers. In addition, the 

Phase II monitoring reports indicate that the call center performance metrics improved following 

the addition of more CSRs. 

AAI also monitors monthly blocked call or busy signal data provided by the telephone 

company to assess whether additional phone lines may be needed to handle call volumes. 

Witness Chambers testified that over the past three years, AAI's call centers had received over 

5.8 million calls, and that during that time, the rate of calls blocked had averaged 0.55 percent. 

In fact, 12 of the 22 months reviewed between January 2010 and October 2011 had a blocked 

call rate of zero.



PAGE 45 

Also, wiuess Chambers described the process that AAI uses to route customer calls 

between its three call centers id an effort to minimize customers' call wait times and ensure that 

calls are. mered by knowledgeable CSRs. AAI's three call centers currently have 116 

dedicated lines to supprt the maximum requirement of 83 CSRs and the automated Interactive 

Voice Response system. In addition to 77 CSRs employed to work at the call centers, within the 

Quality Control Organhtion located in Bryn Maw, Pennsylvauia, there are. 4 additional CSRs 

who answer calls during the peak days of Monday and Tuesday, and 2 additional CSRs who 

answer Aqua Online calls Monday tbrough Friday, for a total of 83 CSRs. All CSRs are 

assigned to various call quem based upon their training rather than their physical work location, 

enswing that all call centers have CSRs trained to answer any type of call h m any state served 

by AAI. 

In addition, witness Chambers te&ied that AAI has taken steps to upgrade the training 

of its CSRs. Sice the last rate case, AAI has had 35 CSRs complete a 3~awse customer service 

training program developed by the AWA for utility company CSRs. Witness Chambers 

testified that AAI was the first utility in the country to have its employees complete the full range 

of the AWA's courses, demonstrating AAI's commitment to CSR training and improving 

Customer service. 

Further, witness Chambers discussed AAI's procedures for evaluating its CSRs on a 

monthly basis and calculating combined call quality scores for each call center. The quality 

Scores are deterrmned ' by AAI's call center managers who review ten randomly selected calls for 

each CSR per month for performance expectations including greeting and closing, adherence to 

policy, analytical skills, and soft skills. Soft skills are allocated 40 points and analfical/strategic 

thinking skills are allocated 60 points. Witness Chambers explained that any CSR who is found 

to be rude would receive a score below 85, and that any CSR who receives a score below 85 

percent receives coaching. In addition, witness Chambers te&ied that if a CSR's quality scores 

did not continue to improve, they could eventuaIly be terminated Sice October 2008, all call 

quality scores for AAI's call centers have remained above AAI's stated goal of 85 percent, 

sometimes reaching 95 percent. 

Witues Chamk concluded that the results of the Phase II Monitoring show that AUF 

has been proactive in adopting aggressive quality control methods and has done an excellent job 

in meeting those service quality goals, and that AUF has made steady improvement in the quality 

of customer service since the 2008 rate case. Witness Chambers added that the CSR Call 

Quality scores improved dramatically when compared to 2008, the estimation rate for Florida has 

been consistently below the target goal of one percent, and them has been a downward trend in 

complaints fled with the Commission. In addition to her direct testimony, witness Chambers 

provided rebuttal testimony on several points raised by OPC related to the Phase II Monitoring 

Plan, as wiu be discussed later. 

Three wibesses fled testimony on behalf of OPC regarding the Phase II Monitohg 

Plan. OPC witnesses Poucher and Disnukes both testified that AUF had shown some 

improvement in its service quality and call center performance. Witness Poucher noted that 

meter reading cornplaints related to estimated bills have declined significautly due to AUF's



PAGE 46 

meter replacement program. Also, witness Dismukes acknowledged that a comparison of the 

fht quarter of 2008 to the last ten months of 2010 shows that AUF improved its abaudon rate 

h m an average of 6 percent to 3.1 percent, improved the percentage of calls answered in less 

than 90 seconds hm 70 percent to 86 percent, and reduced the average speed to answer calls 

hm 86 seconds to 33 seconds?1 

However, all three witnesses asserted that AUF has not sigoilicantly improved its @ty 

of service as perceived by customers. Witnesses Vandiver and Dismukes both noted several 

instances in which the Utility failed to meet its own service goals, and witness Vandiver added 

that any failures in these areas directly impact customer bills. Witness Poucher suggested that 

AUF’s service metric regarding abandoned calls failed to take into account the customers who 

got a busy signal and were blocked h m entering the call center queue. Witness Poucher noted 

that most of the busy signal complaints he d e d involved customers who said they had a bad 

problem and could not reach the Utility. He identiiied three customers who specifically 

complaiued at a service hearing about getting a busy si& one customer each at the Lakeland, 

Gainesville, and New Port Richey hearings. 

Witnesses Poucher and Dmukes also discussed their concerns with the content of the 

Phase II monitoring reports. Witness Poucher testified that he believes AUF’s goals are 

unsatisfactory, the national call center perfomance d t s are not directly translatable to Florida 

operations, and that AUF did not provide historical tracking data that was requested by OPC in 

its initial meetings that could be used to track improved operating performance over an extended 

period of time. He also suggested that AUF’s goal of amwering 80 percent of its calls in less 

than 90 seconds is not strong enough and should be changed to a god of answering 95 percent of 

all calls in30 to 50 seconds. 

In addition, wiiness Dismukes noted that AAI’s call center metrics do not show specific 

statistics for Florida customers. She recommended that we order the Utility to gather state 

specific call center data on a going forward basis, if the cost of doing so is reasonable. Witness 

Dismukes provided the Connecticut Light & Power Company’s (CLP) call center statistics for 

2008 and 2009 as an example of call center standards adopted in other jurisdictions. She 

indicated that she would expect differences between the statistcs that an electric company would 

generate versus a water company, such as a longer average hade time per call for electric utility 

calls because they are more complex and have more complex customers than a water a@. 

However, witness Dismukes later testified that she was not recommending that we use the CLP 

call center metrics as a benckk to measure An’s caU center performance. She suggested 

that an AWWA publication regarding water utility customer relations best practices would be a 

good reference for measuring a utility’s customer service performance.. 

In response, AUF disagreed with OPC’s claim that no historical data was provided. AUF 

witness Chambers testified that in addition to providing all of the information contemplated in 

the Phase 11 reports to which OPC had agreed, AUF spec5cally provided historical information 

Witness Dismukes included March aud April 2010 in this analysis, which were oulside the Phase II monitoring 

perid



PAGE 41 

concerning the reports and metrics. Also, regarding OPC’s rewmmendation that we order the 

Utility to gather state specific call center data on a going forward basis, AUF witness Chambers 

testified that AAI does not currently have the ability to produce the Call Center Monitoring 

Statistics Report for a speciSc state, and she did not know if the system could be modified to 

produce such a report. In response. to OPC‘s assertion that AUF’s goals are Unsatisfactory and 

tbat the call answer time goal should be changed, AUF witness Chambers testi6ed that to change 

the call answe-rtime goal of answering 80 percent of calls in less than 90 seconds to 

auswezing 80 percent of all calls in 60 seconds would require hiring additional CSRs and most 

likely increasing the dedicated phone lines. Also, the Utility would have to staff for the peak 

days of Monday and Tuesday. However, based upon the input that AUF received initially from 

its customers in the Pennsylvania survey, she testified that it would not be approp~ to change 

this goal, and that the current goal of answering 80 percent of all calls in less than 90 seconds 

should be maintained. Further, the current metrics in 201 1 show an overall average answer time 

of 40 seconds. In addition, witness Chambers disagreed with OPC‘s assertion that AAI has an 

insu€ticient number of telephone lines in its call centers and that blocked calls are a significant 

problem. Witness Chambers testified that 116 lines of capacity are more than an adequate 

number of incoming lines and that the average blocked call rate of .55 percent is an excellent 

record in her opinion. 

Also, in response to the OPC‘s exhibit on CLP’s call center statistics for 2008 and 2009, 

witness Chambers demonstrated that AAI had already adopted similar metrics and achieved 

signiscantly better performance than CLP. A comparison of CLP’s Statistics to AAI’s current 

Statistics for 2011 shows that CLP‘s 2009 average speed to answer CSR banded calls was 296.6 

seconds versus AAI’s lower average of 41 seconds. Witness Chambers also noted that CLP’s 

average call abandonment rate was 19.1 percent in 2008 and 26.2 percent in 2009 versus AAI’s 

2011 average abandon rate of 3.6 percent- Further, CLP’s average call handle the was 

approximately 6 minutes and 24 seconds versus AAI’s 201 1 average b dle time of 4 minutes 

and 28 seconds. 

c. Commission Conclusion on Utilitv’s Attempt to Address Customer Satisfaction 

Review of the customer testimony provided at the ten service hearings with regard to 

Am’s quality of service shows that customers expressed complaints related to water quality, 

billing, outages and PBWNs, customer service, community imp* and lifestyle changes. As 

stated earlier, we do not take lightly the concern of these individuals, particularly considering 

the current state of our economy as it pertaim to levels of employment and income and the 

abWy of working class and retired citizens to pay their water and wastewater bills. We do note 

that AUF appears to have worked diligently to address specific customer complaints by working 

toward resolutions with customers, such as establishing payment plans and applying Commission 

rules related to billing and discodnuauce of service in a more customer-fiendly manner. 

The Utility has shown that it has taken steps toward improving customer service, 

including establishing programs to enhauce customer responsiveness, improve customers’ 

interactions with field technicians and CSRs, standardize routine utility processes, and enhance 

customers’ confidence in the Utility. Record evidence indicates that complaints filed against the



PAGE 48 

Utility have decreased by approximately 24 percent from 2007 to 2010, despite the fact that there 

was a protested rate case in progress which generally leads to an increase in complaints filed. 

We believe that this decrease in the volume of complaints can be attributed to the fact that 

customers are experiencing the benefits of the Utility’s improvements. 

Although testimony reflects that CSRs have been rude to customers, there does appear to 

have been improvements. We believe AUF has worked to provide additional training to its 

CSRs in order to provide more satisfactoIy and more efficient service to callers, and AUF has 

cited that its review of calls in which customers deemed CSRs rude revealed only one instance in 

which the CSR could have been more helpful but was not rude. We would encourage AUF to 

continue to provide training to its CSRs, particularly with respect to those issues that are unique 

to Florida customers, such as water quality. 

However, we note that customers have historically had significant con- with respect 

to AUF’s billing practices. Although the Utility continues to take steps to address billing and 

payment issues raised by customers in the 2008 rate case and in customer meetings and customer 

senice hearings in the instant case, we note there was still extensive testimony on problems with 

bw, especially with backbilling. Having reviewed the policies and procedures AUF has put 

in place to address backbii high bills, online payments, leak adjusbnents, and shut-off for 

nonpayment instances, we believe AUF is moving toward ameliorating these problems. Further, 

we note that in some instances the Utility has gone beyond what is required by our rules in its 

efforts to address customer biuing concerns. 

Fkgarding aesthetics, it appears that the Phase II aesthetic program has had some success, 

and we believe the Utility should continue to attempt to h d cost-eEective means for improving 

aesthetics. We note that the naturally occuning aesthetic properties in some systems’ water 

sources can often be difficult and expensive to remove. We believe AUF’s aesthetic program is 

a competent plan to effectively address its customers’ aesthetic water quality concerns. This is 

evident through codmation of work that has been completed to improve aesthetic water 

quality. 

Although it does not appear that AUF is providing a harmful product to its customers, 

there was evidence that the Utility’s product was undesirable to many customers. We believe 

that although AUF’s aesthetic improvement project has been well developed and appears to be 

progressing toward improvement in customer satisfaction concerning water quality, AUF is 

faced with a challenging situation. Therefore, we encourage the contindon of AUF’s aesthetic 

improvement program and the inclusion of the next tier of systems intended for the second phase 

of the project with the caveat that the Utility be aware of the costs and use the most cost-effective 

means. In addition, we encourage the continuation of the yEs/AuF joint task force to continue 

to work toward unique account establishment, billin& and shutoff issues that && the 

Arredondo Farms comunity. 

AUF and OPC disagreed regarding the outcome of the jointly proposed Phase II 

Monitoring Plan. AUF ar@ that it has made steady improvement in the quality of customer 

service since the 2008 rate case, while OPC argued that there was no signiscant improvement in



PAGE 49 

the qualify of service based on the eight months of additional monitoring. We agree with points 

raised by both parties. OPC is correct that there were no significant improvements noted solely 

during the eight months of additional monitoring. However, when the review is extended to 

include all the available information leading up and subsequent to Phase E, the record supports 

AUF's testimony that its call center and customer service performmce has improved. Further, 

the record supports that AUF has either maintained or further improved its performance 

measures since October 2008, a period of three years. 

Also, it appears AUF did not provide historical data or suEcient information on Florida 

calls. AUF has provided data as far back as January 2007 for certain performance measures. 

Combined with the updated information through October 201 1, all the parties were given nearly 

five years of data to review. Further, five of the seven reports provided during the Phase II 

monitoxing period were specifically related to Florida calls. We believe that taking all of the 

reports together provide a comprehensive view of AAI and AUF's performance with respect to 

calls and complaints from Florida customers. In addition, because all AAI customer calls are 

routed through AAI's call centers using the same process, it appears that the national call center 

performance results are directly translatable to Florida operations. The evidenee supports that 

Florida customers will share similar call experiences with customers h m other states, and that 

call metrics are affected more by other factors, such as call volume and the number of CSRs, 

than by the state fiom which the call is placed. Although we agree with OPC's testimony that 

blocked call data should be considered when reviewing call center performance, we disagree 

with OPC's assertion that blocked calls are a signiscant problem with AAI's call center 

operations or performance metrics. Further, the evidence demonstmtes that AAI has 

implemented call center mekics similar to those implemented in other jurisdictions, and in fact, 

experienced better results than those reported in the CLP call center exhibit provided by OPC 

witness Dismukes. 

We note that AAI has taken many steps to ensure proper operafion of its call centers 

including, but not limited to: reviewing its call center metrics on an annual basis; responding to 

permanent increased call volumes by employing additional CSRS, responding to peak call days 

by adding additional CSRs on those days; implementing a call routing system that allows calls to 

be routed to other call centers during times of high call volumes; assigning CSRs to various call 

queues based upon their training to ensure that calls are answered by CSRs trained on those 

issues; monitoring monthly blocked &usy signal data to assess when additional phone lines 

and/or CSRs may need to be adw evaluating CSR performance monthly; providing coaching 

to CSRs with inadequate performance scores; and providing additional training to CSRs through 

the AWA. In addition, the record shows that AAI previously conducted a year-long survey of 

its Pennsylvania customers to review the need and desire on the part of customers to add 

additional call hours and CSRs. All these factors demonstrslte that AAI is being attentive to the 

performance of its call centers and is prepared to make changes in its telephone system, call 

center staEng, and training when the performance data indicates dlicient need. 

Regarding the results of the Phase II Monitoring Plan, ov- we believe AWs 

arguments that it has been proactive in establishing its quality of service metrics and 

implementing changes to address customer service concerns has some merit The evidence



PAGE 50 

supports AUF’s assertion that it has made improvement in the quality of customer service since 

the 2008 rate case, and has either maintained or fuaher improved its customer service 

performance metrics since October 2008, a period of tbree years. However, noting the volume 

and nature of the calls, the customers’ testimony at the service hearings, and the total number of 

customer complaints, we find that the Utility has not yet reached the level of service that we 

could determine to be satisfactory. In review of the evidence provided, and pursuant to Rule 25- 

30.433(1), F.A.C., we find AUF’s attempt to address customer satisfaction is marginal. 

Further, although we have found the Utility’s quality of service to be mar-, any 

quality of service modto& costs innmed during the test year shall be amoItized over a 5-year 

period pursuant to Rule 25-30.433(8), F.A.C. In a late-fiied hearing exhibit, the Utility reflected 

that it included $75,225 in test year expenses for our requked Phase I Monitoring Plan. In 

accordaDce with Rule 25-30.433(8), F.A.C., and allowing an annual expense of $lS,O45,0&M 

expenses shall be reduced by $60,180 and working capital be increased by $60,180. The table 

below reflects the adjustments to each rate band and stand-alone system. 

5. Conclusion 

Based on the m rd evidence, we find that the quality of the Utility’s product and the 

operating condition of the Utility’s plant and facilities are each marginal as well as its attempt to 

address customer satisfaction. Therefore, we find AUF’s overall quality of d c e shall be 

deemedmarginat.



PAGE 51 

B. Additional Actions for oualitv of Service 

In our PAA Order issued in this docket, we: (1) found that AUF’s quality of service was 

marginal; (2) proposed a 25-basis point reduction from the midpoint of the ROE calculated 

pursuant to the current leverage graph; and (3) proposed to require development of a Phase III 

Monitoxing Plan. These findings and requirements were protested, and thus became null and 

void. 

At the request of the parties, what bad been one issue addressing quality of service in the 

PAA Order was split into two issues, with the first issue addressing the quality of service 

(discussed above), and the second issue addressing whether any additional actions should be 

taken by this Commission based on AUF’s quality of service. Under this issue, there are two 

main snbp-. The first subpart addresses whether the quality of service is so deficient that AUF 

should be penalized by reducing its ROE from the normal midpoint as would be indicated by the 

current leverage formula The second subpart addresses whether the quality of AUF’s service is 

so deficient that a third monitoring plan should be initiated Each of these subparts is discussed 

below. 

1. Parties’ Arwments 

a Parties’ Arwnents on PenaIties/Reduction of ROE 

(1) AUF 

AUF witness Szzygiel testified that he disagreed with OPC witness Dismukes’ 

testimony urging us to impose a 100-basis point @ty on the Utility’s ROE for insufFcient 

quality of service. Witness Szczygiel pointed to the testimonies of AUF witnesses Luitweila 

and Chambers, along with various DEP and WMD witnesses, that demomtmte that AUF’s 

quality of service is good and has signiscantly improved since the last rate case. Further, he 

testified that the reduction is unwarranted and would result in coniiscatory rates. Fdy, witness 

Szczygiel noted that witness Dismukes had argued for similar draconian ROE penalties in the 

last rate case, which we rejected 

AUF argued in its brief that a plain reading of Section 367.111, F.S., authorizes this 

Commission to reduce a utility’s ROE & if it is shown that the utility has failed to provide 

water and wastewater service that meets standards promulgated by DEP or the WMDs. AUF 

also cited a case in which the Florida Supreme Court cautioned that our authority to reduce 

earnings is a “powerhl tool” to bring about improved utility services, but it should be used 

‘‘carefidly” so as to avoid depressing earnings to a level that would jeopardize the utility’s ability 

to continue service improvement programs. &g Askew v. Bevis, 283 So. 2d 337, 340 (Fla 

1973). AUF referend two Commission orders that it believes demo- that we have been 

wfd to limit ROE penalties to egregious situations such as where the utility has flagrantly 

disregarded enviromental regulations or ignored Commission rules.” AUF a s d that there 

zz Scs Order No. F’SCo3-0699-PAA-SU, issued June 9,2003, in Docket No. 020439-SU, In re: Amlication for a 

and orda No. PSC-9&0763-FOF-SU,



PAGE 52 

is no evidence in this case, and indeed no claim, that AUF has flagrantly disegarded DEP or 

Commission des, charged unanthorkd rates, or ignored our staff's requests for infodon. 

Further, AUF noted in its brief that OPC witnesses could not identify any promulgated DEP or 

WMD standard that AUF fdedto meet in this case. 

In addition, AUF cited the Supreme Court decision in Gulf Power Co. v. Wdson, 597 SO. 

2d 270 (Ela 1992), and noted that it is particularly imtruc6 've in addressing whether we should 

impose an ROE d t y on AUF. In its briec AUF discussed that in that case, the utility's 

managanent admitted that a senior executive had for years been engaged in corrupt piactices 

such as theft, misuse of utility properly, and inappropriate. political conttiiutions. This 

Commission redd Gulf Power's ROE by 50 basis points, but limited that ROE reduction to a 

period of two years on the basis that utility mauagement had shown a commitment to address its 

prior problems. AUF argues that none of those extraordinary circumstances are present in this 

case. AUF argued in its brief that AUF is committed to taking actions beyond that requid by 

law to improve customer service. Further, AUF argues the puuitive ROE penalty reu~mmended 

by OPC ignores AUF's good faith efforts to provide and improve its quality of service to 

customers, and should be rejected 

(2) OPC 

OPC witness Poucher recommended that we reach a hdhg that AUF's service is 

unsatisfactory and set rates based on an ROE that is at least 100 basis points below the midpoint 

until such time as AUF's service is deemed satisfactory. Witness Poucher testified that the 100- 

basis point reduction would serve as an incentive to motivate AUF to improve its service, 

product, and operatiod efficiency. Witness Poucher also indicated that there were no DEP or 

WMD standardsthat he was alleging that AUF had Med inthis case to warrant an ROEpenalty. 

Rather, he stated that the recommendation was based upon customer complaints about customer 

service that were heard at the service hearings, and on AUF's failure to meet some of its internal 

performance goals. 

OPC witness Dmukes also recommended that we reduce AUF's ROE by 100 basis 

points. In supprt of this recommendation, witness Dismukes asserted that the customer 

testimony and customer complaints, as well as the information provided in the testimony of 

witnesses Vandiver and Poucher, provide clear indications that despite ow initial finding of 

substantial improvemen6 the Utility has a long way to go before its quality of service can be 

considered satisfactory. Witness Dismukes discussed several cases in which we have made ROE 

reductions, including a 100-basis point reduction for pine Island Utility and Consolidated 

Utilities Company, a 50-basis point reduction for Aloha Utilities and Ocean Reef Club, and a 25- 

basis point reduction for Southem States Utilities (the predecessor for most of the AUF systems). 

Witness Dmukes added that while there has been some improvement in the call center 

statistics, thm are still numerous problems which have not been resolved, including: customer 

service, billing accuracy, estimated bills, and water quality. Thus, thm has been a continmiion 

issued June 3,1998, in Docket No. 971 182-SU, In re.: AmIicatim for a Staff-assisted rate c85c in Marion Comb' by 

BFF Corn.



PAGE 53 

of the problems identified in the 2008 rate case. Witness Dmukes also indicated that she was 

not testifying on DEP standads, and that her testimony regarding water suality deficiencies was 

fmm the customer’s perspective kom the service hearing transcripts. 

OPC argued in its brief that the reduction of 100 basis points is necessary to effect change 

in AUF’s behavior that is long overdue without creating financial jeopardy to the Utility. OPC 

also noted that a 25 basis point reduction in revenue is less than $9O,OOO on a combmed basis, 

and represents .6 percent of AUF’s 2010 total revenue or less than .01 percent of AAI’s 2010 

total revenue. In contrast, a 100-basii point reduction would be approximately 2.6 percent of 

AUF’s total revenues and .05 percent of AAI’s total revenue. 

(3) YES, Pasco County, and AG‘s Argument 

Althongh the other Interveners agreed that AUF’s ROE should be redd by 100 basii 

points, they did not offer specisc testimony or any arguments in their briefs on this issue. Also, 

YES took the position that we should disallow a portion of executive salaries and the requested 

rate case expense, but did not present any argument under this issue. 

b. Parties’ Areuments on Continued Monitoring 

(1) AUF 

AUF argued in its brief that the record reflects that additional monitoring is not requked 

and would impose unnecessary costs on the Utility and its customers. Further, AUF argued that 

for over two years its seMce quality has already been the focus of two separate and rigorous 

monitoring plans. AUF contended that the monitoring results, which are a part of the record in 

this case, show that AUF has good customer service and consistently complies with 

environmental requirements. AUF also noted that the record evidence shows that the Phase I and 

Phase II Monitoring Plans have imposed significant costs on AUF in excess of $230,000. 

In addition, AUF stated in its brief thaf “OPC’s quest for continued monitoring rings 

hollow especially when OPC was so apathetic to the monitoring plans it initially worked to 

develop and ultimately agreed to.” AUF added that, “[tlhe apathy was exemplified at the hearing 

when OPC witness Poucher admitted that, while AUF had complied with OPC’s request and 

provided OPC with the audio tapes of all of the calls into the call centers, the OPC had never 

attempted to listen to even one of the tapes.” AUF also noted that witness Poucher admitted that 

the OPC had never visited and inspected AAI’s call center even though such inspection was 

expressly contemplated by our Phase II Monitoring Order. During her deposition, witness 

Cbambers elaborated that AUF felt that OPC’s visit to an AAI call center would give OPC a 

better understanding of AAI’s organization by providing OPC with firsthand knowledge of the 

call centers, how the calls come in and how AAI operates. AUF concluded in its brief that ‘‘[iln 

light of AUF’s demonstrated commitment to improved customer service, additional monitoring 

is unneces.wq and would not be cost effective.”



PAGE 54 

During her deposition, witness Chambers testi6ed that AAI does not currently have the 

abiity to produce the Call Center Monitoring Statistics Report for a spec3ic state as was 

suggested by OPC witness Dismukes, and she did not know if the system could be modified to 

produce such a report. Also, she opposed OPC witness Poucher’s suggestion that the Utility be 

required to provide information on every complaint as part of a Phase III Monitoring Plan 

because it had already done so during Phase I at a cost of $100,000. In the event a third round of 

monitoring is implemented, witness Chambers suggested that it include reports similar to those 

used during Phase JI. 

(2) OPC 

As discussed above, OPC believed AUF’s quality of service was Unsatisfactory. 

Consequently, OPC witness Poucher testified that that we should require. our M to continue to 

actively monitor Am’s seMce quality and require AUF to provide prompt and comprehensive 

reports regarding its efforts and progress in providing a drinkable, quality product Witness 

Poucher recommended that our staff, OPC, and AUF work collectively to develop and 

implement a monitoring program that includes measurement, benchmarh, and programs that 

would improve Am’s operatid efficiencies and service quality. During his deposition, 

witness Poucher recommended that the Phase IJI Monitoring Plan should include a review of 

every complaint received by the Utility as was done in the Phase I Monitoring Plan. He 

recommended that we require. the Utility provide documentation showing the facts and closure of 

every complaint received, not just the complaints filed with the Commission. 

OPC witness Vandiver testified that she had not developed a specific monitoring plan or 

performance standads, but suggested that a third phase of monitoring should include DEP 

compliance, billing issues, and customer service issues. In addition, she suggested that we 

develop some of the metrics instead of using Am’s metrics, unless AUF has some metrics that 

meet what we are interested in 

Regarding additiod options, OPC witness Dismukes recommended that we order the 

Utility to gather state specific call center data on a going forward basis, if the cost of doing so is 

reasonable, and suggested use of an AWWA publication regarding utility customer service best 

practices. Although witness Dismukes provided an exhibit showing call center metrics for CPL, 

she later indicated that she was not suggesting that it be used as a benchmark to measure AUF’s 

plfOIDX3Il~. 

(3) YES, Pasco County, and AG 

None of these three parties offered any specific testimony or aguments in their briefs 

regadhg additional monitoring.



PAGE 55 


a Penalti- ‘on of ROE 

Section 367.1 11(2), F.S., states in part, “[ilf the commission finds that a utility has failed 

to provide its customers with water or wastewater seMce that meets the standards promulgated 

by the Department of Environmental Protection or the water management districts, the 

commission may reduce the utility’s return on equity until the standards are met“ As discussed 

above in Section lV. A. Wty of Service, although AUF has taken steps, and is continuing to 

take steps, which address the environmental compliice and customer service issues that have 

been raised, the Utility has not yet reached a level of service that we consider satisfactory. 

Having found that the overall quality of service is marginaZ we find that the ROE shall be 

reduced limn the midpoint as indicated by the current leverage 4 pursuant to the holding of 

the ~lorida supreme Court in Power comaany v. WilsonY’ OPC cited nummus times 

where we have redd the ROE based on marginal quality of service. In cases of unsatisfactory 

quality of service we have reduced the ROE by as much as 100 basis points. However, we note 

that we have imposed a penalty approaching 100 basis points only under egregious 

circumstances. We do not think such egregious cimrms*m ces exist in this case. Therefore, we 

do not agree with OPC that ROE should be reduced by 100 basis points. Instead, because we 

have found the quality of service to be marginal, under the circumstan ces set forth herein, we 

find that the ROE shall be reduced by 50 basis points. 

b. Continued Monitoring 

As noted above, AUF believes no continued monitoring is warranted, but OPC witness 

Poucher recommended we require a Phase Ill Monitoring Plan to include a review of every 

complaint received by the Utility as was done in the Phase I Monitoring Plan. Staff witness 

Hicks provided testimony regarding OUT process for regularly reviewing Complaints filed with the 

Commission for rule violations. She testiiied that during the complaint resolution process, 

complaint staff determines if the complaint is a possible rule violation. If it is determined that 

the complaint is a possible rule Violation, an idkction close-out code is applied to the complaint 

so that it can be tracked. Technical staff is then notified when there ap- to be a significant 

number of possible Violations of the same rule or a large quantity of possible violations received 

in a short timehe. Witness Hicks testified that AUF did not receive a significant number of 

apparent rule violations h m 2009 through 201 1. 

However, as noted by witness Poucher, witness Hicks’ review is only applicable to 

complaints filed with the Commission. Wituess Poucher recommended that we require the 

Utility to provide documentation showing the facts and closure of every complaint received by 

AUF, not just the complaints filed with us. 

Something similar to this has already been done in P k I, and it proved to be quite 

costly. As noted by AUF, the Phase I and Phase II Monitoring Plans have imposed significant 

2, 597 So. 2d270 (Fh 1992).

I 



PAGE 56 

costs on AUF in excess of $230,000. Further, by witness Poucbr’s own admission, these plans 

did not appear to be effective. Also, during Phase I, approximately six months of call center 

sound recordings and detailed complaint records were monitored with no adverse trends noted by 

our M. Although OPC has recommended that we require similarly detailed records again, 

witness Poucher admitted that OPC never listened to any of the call center sound recordings 

provided to OPC by AUF during Phase I. Wkess Poucher stated, “I didn’t think they were of 

value since you made the company aware that you’re going to be taking observations of their 

calls.’’ Therefore, we find that continued monitoring of this nature is not warranted. Such 

intense monitoring is not cost effective and may have reached a point where it is 

counterproductive. 

Further, the evidence suggests that while OPC has been a strung proponent for the Phase 

I and Phase II Monitoring Plans, and took part in the development of the Phase II Monitoring 

Plan, it appears that OPC has little faith in the efficacy and worth of the data that was provided 

pursuant to the Plans. Instead, OPC has relied more heavily on customer testimony in 

detemhhg what further actions should be required. Based upon the record evidence in this 

case, we do not believe a third round of call center monitoring as was done in Phase I is 

necessary, and agree with AUF’s testimony that a Phase III Monitoring Plan of this nature would 

impose unnecessary costs on the Utility and its customers. In addition, the Phase II monitoring, 

while less costly, still caused AUF to incur SUM costs. Therefore, we find that additiod 

monitoring in the nature of the Phase I or Phase II Monito~ing Plans shall not be wntinued. 

However, based on testimony provided, there appears to be signiscant customer and 

Intervenor concern regarding the number of and compliance with the requirements for PBWNs. 

Also, our staff has advised us of four very brief reports that were help?M in monitoring the 

service provided by AUF, and which were already generated by AUF. These reports are: (1) the 

Call Center Monitoring Statistics Report; (2) the Management Quality Performance Repoe (3) 

the Florida Complaint Support Information Rep% and (4) the Florida Score Card Wrt. 

Further, as regards the Florida Complaint Support Information Report, our staff advises us that 

only the bottom-line total is needed fimm that report. Fdy, we note that AUF continues to 

have multiple warning letters, consent orders, or notices of violation hm either DEP, CH, or the 

WMDs. Based on the above, we find that our staff shall continue to monitor these type of 

problems and have access to the above-noted documents. In consideration of the less than 

positive perception by those parties and customers towards AUF’s haudljng of PBWNs, the 

continuing problems with customer complaints, and the multiple warning letters, consent orders, 

or notices of violation, we find that our staffshall continue a modi6ed monitoring of these areas. 

Specilically, we believe that the parties’ and customers’ concerns can be addressed more 

effectively through our staff‘s review of quarterly status reports regarding PBWNs, the four 

above-noted AUF reports, and any new wamiqg letters, consent orders, or notices of violation 

that may occur. Based on all the above, we find that a third phase of monitoring addressing 

AUF’s c d centers and all complaints not fled with the Commission is not warranted and would 

not be cost effective. However, we further find that, along with our cmt process for 

monitoring complaint trends, for a period of one year following this Final Order, AUF shall 

provide quarterly reports regardjng PBWNs, the Call Center Monitoring Statistics Report, the



PAGE 57 

Management Quality Performauce Report; the Florida Complaint Support Information Report 

(only the overall monthly bottom-line totals for CSR contacts), and the Florida Score Card 

Report- For the quarterly PBWNs Report, the report shall include an explanation for each 

occurrence, the name of the systems where each PBWN o c c d the number of customers 

affected, explanation as to how the customers were notilied, and the length of time the PBWNs 

lemained in effect. The PBWN reports shall also include a summahy of customer responses to 

the PBW’Ns, and any written customer responses shall be attached to the report. 

As indid above, the information obtained through the required reports is for this 

Commission to observe AUF’s attempt to address customer satisfaction related to PBWNs and 

quality of service. Our staff will review each report for consistency with our order and will 

report back to us if it has my concerns. 

3. Commission Conclusion 

Based on the analysis above, we find that: (1) the Utility’s ROE shall be reduced by 50 

basis points h m the midpoint of the current leverage graph; and (2) there shall be no continued 

monitoring plan similar to the plans developed in Phase I and Phase II except as discussed above 

concerning PBWNs, the four reports, warning letters, consent orders, and notices of violation 

that may occur. For these con-, AUF shall provide quarterly repo& regarding PBWNs, the 

four above-noted reports, and any new warning letters, co-t orders, or notices of violation 

that may occur for a period of one year following the issuance of this Final Order in this docket. 

Our staffwill review each report for consistency with this order and will report to us if it has any 

concerns. 

A. Pro Forma Plant 

V. RATE BASE 

In the PAA Order, we disallowed several proposed pro forma projects requested by AUF 

due to imuEcient supporting documentation regarding the cost and completion of the projects.” 

In Am’s cross-petition of the PAA Order, it requested that six of these projects be recognized 

for purposes of this case. 

1. Parties’ Arments 

aAUF 

AUF Witness Luitweiler tead that, to include a pro forma project in rate base, this 

Commission quires documentation supposing the purpose, design, and price of the project to 

allow sutlicient evaluation of the project’s prudence. This requirement is typically met through 

executed contracts, work orders, and current price quotes. OPC witness Woodcock, the only 

other Witness to address Am’s pro forma plant requests, conceded thst if AUF secured bids and 

provided proof that construction would be underway within the requjred period, then the projects 

2* - See Order No. PSC-l1-0256-PAA-WS, pp. 3542.



PAGE 58 

should be placed into rate base. In its brief, the Utility asserted that its undisputed evidence 

supports the purpose, design, and price of these six pro forma plant projects, and also 

demonstmtes that each has been or will be placed into service withintherequiredperiod. Thus, 

AUF contended that these six projects should be included in rate base. 

AUF argued that it has demonstrated that all six of these projects will be completed by 

February 2012, within 24 months after the end of the test year. The Utility contended that OPC’s 

assertionS that AUF’s pro forma plant projects wiU not be completed within 18 months h m the 

end of the historic test year references a non-existent standard. Moreover, the Utility pointed out 

that Section 367.081(2)(a)2., F.S., provides that, in fixing rates which are just, reasonable, 

compensatory and not unfairly discriminat0 ry, we “shall consider ntility property, including land 

acquired or faciities constructed or to be constructed within a reasonable time in the future, not 

to exceed 24 months after the end of the historic base year,” not 18 months. The following 

discussion addresses AUF’s support for each of these six plant projects. 

(1) Breeze Hill Wastewater I&I Project 

AUF witness Luitweiler testified that the Breeze Hil wastewater system previously had a 

high amount of I&I. Witness Luitwder proposed an I&I rehabilitation project in its rate case 

sling to address the excessive I&L Witness Luitweiler stated this project was completed in 

March 2011. He indicated tbat, on May 31,2011, this project was closed h m CWJP into plant 

in service. Witness Luitweiler tded that the total amount of this now-closed project is 

$78,165, including overhead. 

(2) Lake Josephine and Sebring Lakes AdEdge Water Treabnent Project 

Wifness Luiiweiler testified this project has been designed, permit applications have been 

submitted to DEP, and the equipment ordered In his rebuttal testimony, he testified that the 

filtration equipment h m AdEdge was delivered on October 12,201 1. Witness Luitweiler stated 

that a contractor was engaged to complete installation of the AdEdge treatment at both facilities 

by November 201 1. Witness Luitwder testified that the projected cost for these two projects of 

$372,760 should be included in rate base as pro forma plant 

(3) Leisure Lakes A w e Water Treatment Project 

Wibess Luitweiler testified this project has been designed, a permit application has been 

submitted to DEP, and the equipment ordeed In his rebuttal testimony, he testified that the 

filtration equipment was ordered h m AdEdge while the permit application was pending at DEP. 

Witness Luitweiler testified that a construction permit was tinally issued by DEP on October 6, 

2011. HestatedthattheworkoninstallingthetreatmentequipmentistobegininNovember 

2011. In its brief, AUF stated it expects construction to be completed by mid-January 2012. 

Witness Luitweiler testified that actual costs of $105,799, plus additional costs for installation, 

jnspection and certitication for this project should be included in rate base as pro forma plant



PAGE 59 

(4) Peace River Water Treatment Project 

Witness Luitweiler testified that AUF completed the Peace River Water Treatment 

Project design and submitted the permit application to DEP. He testified that AUF executed a 

contract with the treatment system supplier on August 23,2011. In his late-med deposition 

Exhibit 5, witness Luitweiler provided an executed contract for construction dated Novemh 18, 

2011. He asserted this project is expected to be completed by February 15, 2012. Witness 

Luitweiier testified tbis project, which is requid by a DEP Consent Order, will cost $204,681 

and should be included in rate base as pro forma plant. 

(5) Tomoka Twin Rivers Water Treabnent Plant Tank Lining Project 

Witness Luitweiler testified that the need for this project was identihi in a February 2, 

2010, Volusia County Department of Health (VCHD) letter, which addressed the age and 

condition of the concrete block tank at the Tomoka Twin Rivers plant Witness Luitweiler 

indicated that the previous owner failed to coat the tank and the project to reline the tank was 

completed in May 2011. On June 30, 2011, this project was closed from C W 

into plant in 

service. Witness Luitweiler indicated that the total mount of this now-closed project is $48,066, 

including overhead, and should be included in AUF's rate base in this rate case. 

(6) Sunny Hills Water System Wah Tank Replacement Project 

Witness Luitweiler testified that AUF completed a design for a new water tank and 

piping, and the design and construction permit application was filed with DEP on June 6,201 1. 

Subsequently, the tank was ordered, a contract was executed on September 14,2011, and AUF 

authorized a contractor to commence work Witness Luitweiler asserted that the total amount of 

this project is $267,885 and should be included in rate base as pro forma plant 

In closing, AUF argued that three of these projects were performed to comply with 

environmental reqkents, including: (1) Peace River Gross Alpha Treatment (2) Sunny Hills 

Additional Storage; and (3) Tomoka Twin Rivers Tank Liners. The Lake Josephine and Sebring 

Lakes AdEdge and Leisure Lakes AdEdge Treatment projects were undertalcen due to the 

Commission-approved Phase II Aesthetic Water Quality Improvement plan. As such, AUF 

argued that it is entitled to recover the costs of these projects pursuant to Section 

367.081(2)(a)Z.c., F.S. 

OPC protested the inclusion of several of these items due to the uncertainty of the 

completion of the projects. OPC witness Woodcock testified that he was concerned that even 

though the equipment for improvements may have been purchased, there is no commitment that 

they wiil actually be installed and placed into operation. Further, witness Woodcock expressed 

that even though the projects may be bid out to a contractor to install, there may be other reasons 

that could delay or prevent the projects fiom being completed. However, witness Woodcock 

conceded that, once comtruction is under way there is a greater likelihood that the facities will



PAGE 60 

be completed. The three remaining systems for which construction has yet to start are the 

Leisure Lakes AdEdge Water Treabnent Project, the Peace River Water Treatment Project, and 

the Sunny Hills Water System Water Tank Replacement Project. 

(1) Leisure Lakes AdEdge Water Treatment Project 

In its brief, OPC stated that the Utility included $150,000 in its MFRs for the Leisure 

Lakes AdEdge Water Treatment Project OPC pointed out that AUF witness Luitweiler testified 

that the Utility expected to bid the construction by early November 201 1. OPC also noted that, 

as of the date of AUF witness Luitweiler’s deposition on November 16,201 1, AUF still had not 

signed a contract OPC stated that witness Luitweiler testified that the current estimated date for 

the bids to be awarded was the middle of December. Based on OPC witness Woodcock’s 

concern that any project is uncertain until construction actually begins, OPC stated that this 

project is still very uncertain. OPC expressed concern that, if any construction begins in the next 

month, it will be well over 20 months after the test year before this project might be completed, 

and as such, the Peace River project should not be included in rate base. 

(2) Peace River Water Treatment Project 

In its brief, OPC stated that the Utility included $50,000 in the MFRs for the Peace River 

Water Treabnent Project OPC pointed out that AUF witness Luitweiler testified that the Utility 

expected to bid the construction by October 3, 2011. OPC also noted that, as of the date of 

witness Luitweiler’s deposition on November 16,201 1, the Utiliiy had still not signed a contract 

OPC stated that witness Luitweiler testified that the contract for mmtmction had been awarded. 

OPC also argued that while witness Luitwejler bad executed a contract, he could not codm 

whether the Notice to Proceed had been issued. Based on OPC witness Woodcock’s concern 

that any project is uncertain until construction actually begins, OPC stated that this project is still 

very u n c d OPC expressed concern that, if any construction begins in the next month, it will 

be well over 20 months after the test year before this project might be completed, and as such, 

the Peace River project should not be included in rate base. 

(3) Sunny Hills Water System Water Tank Replacement Project 

In its brief, OPC stated that the Utility included $120,000 in the MFRs for the Sunny 

Ws Water System Water Tank Replacement Project Witness Luitweiler testified that the 

Utility expected construction to be completed by Decembez 15, 2011. OPC also pointed to 

witness Luitweiler’s deposition where he teslified that a Notice to Proceed had been issued and 

that he would provide that as a Late Filed Exhibit No. 4. However, OPC stated that its review of 

the late fled exhibits does not show a Notice to Proceed. OPC stated that witness Luitweiler was 

asked about the status of the project and still could not confirm that construction had started 

Based on OPC witness Woodcock’s concern that any project is uncertain d construction 

actually begins, OPC stated that this project is still very uncertain. In its brief, OPC expressed 

that, if any construction begins in the next month, it will be well over 20 months after the test 

year before this project might be completed, and as such, the Peace River project should not be 

inclu@ in rate base.



PAGE 61 

For the reasons discussed above, OPC recommended that these three projects should not 

be included in rate base. 

c. mer Ixltervenors 

YES, Pasco County, and AG either deferred to or adopted the position of OPC on this 

issue, and presented no argument, 

2. Commission Analvsis 

Section 367.081(2)(a)2., F.S., states: 

For purposes of such proceedings, the commission shall consider utility property, 

including land acquired or facilities constructed or to be constTucted within a 

reasonable time in the future, not to exceed 24 months after the end of the historic 

base year used to set final rates unless a longer period is approved by the 

commission, to be used and useful in the public service . . . . 

The test yera in this case is the historical 13-month average year ended April 30,2010. 

The 24-month period following this test year will end on April 30,2012. As such, we disagree 

with OPC’s contention that the Leisure Lakes AdEdge Water Treafment Project, the Peace River 

Water Treafment Project, and the Sunny Hills Water System Water Tank Replacement Project 

should not be included in rate base because it would be over 20 months after the test year before 

these projects might be completed In addition, we disagree with OPC’s argument that pro forma 

plant projects should not be included in rate base unless construction has begun, because we have 

previously approved pro forma plant based on an award bid or executed contract.25 

Based on the support documentation provided by AUF, we find that the Utility has 

supported $792,347 related to the six protested pro forma projects. However, for the three pro 

forma projects that were not completed as of the end of the technical testimony, AUF shall 

provide certification from DEP as to the completion date or date the projects were placed into 

service. The table below reflects the breakdown by rate band and stand-alone system 

25 

& Order Nos. PSC10-040O-PAA-WS, pp. 10-11, h e d June 18, 2010, in Docket No. 090392-WS. & 

ADDlicationfain~ inwater and waste water rates in Lake Countv bv Utilities. Inc. of Permbrooke: and PSC-08- 

0622-PAA-WU, pp. 5-6, h e d September 24,2008, in Docket No. 060540-WU, In re: Amlicaticg fa increase in 

waterratesinPasu, CountvbvColonialMaaorUtilityComoany.



PAGE 62 


SupportedProFormaPlantProjects 

I I 

Based on the support documentation provided by AUF, we find that the Utility has 

supported $792,347 related to the six protested pro forma projects. As such, the Utility’s pro 

forma plant additions shall be increased by $24,182 for water and decreased by $21,835 for 

wastewater. In Bccordatlce with the depreciation rates prescribed in Rule 25-30.140, F.A.C., 

corresponding adjustments shall be made to increase accumulated depreciation and depreciation 

expense by $1,132 for water and decrease accumulated depreciation and depreciation expense by 

$485 for wastewater. In addition, corresponding adjustments shall be made to decrease p p m 

taxes by $8,549 for water and $2,136 for wastewater. Also, as stated above, AUF shall provide 

certiiication from DEP as to the completion date or date the projects were placed into service. 

The specific rate band and system adjustments are set forth in the table below. 

B. U&U and Comuosite U&U for Protested Water Treafment Svstems 

Rule 25-30.4325, F.A.C., addresses the considerations to be used in determining the 

U&U percentages for water treat me^ systems. The U&U percentage is deteamined by dividing 

the numerator, which includes peak customer demand less excessive unaccounted for water 

0, 

plus fire flow and a growth allowance, by the denominator, which is based on the jirm 

reliable capacity (FRC) of the wells. For systems with storage facilities, the FRC is based on 16 

hours of pumping and the units are referend in gallons per day (gpd). For systems without 

storage facilities, the units are referenced in gallons per minute (gpm). The rule also contains a 

provision by which an alternative calculation may be considered if supporting justification is 

provided, including seMce area or heatment capacity restriction, changes in flows due to 

conservation or a reduction in the number of customers, and dtedve peaking factors. 

Paragraph (4) of the rule provides that a water plant is considered 100 percent U&U if the 

service area ‘‘is built out and there is no apparent potential for expausion of the service territory

- 



PAGE 63 

TABLE 1 - WTP U&U 

system AUF U&U% OPC U&U% Comm’n Approved 

U&U% 


a 

AUF’s position is that all of the U&U findings in our PAA order should be approved as 

W. AUF wituess Rendell testified that we should use our previously approved U&U 

methodologies and resulting percentages in determining the correct amounts of U&U for WTPs.



PAGE 64 

He stated that AUF usedthe same methods in its filing as were appmvedinthe last rate case 

which were based upon Commission rules. Witness Rendell asserted that regulatory Certainty is 

a core principle for any regulated utility and that ignoring the last approved U&U percentages 

undemkes that certainty. The courts have made it clear that we must adhere to our "prior 

plactices in calculating used and useful percelltages.~~ 

AUF wilness Seidman testified that OPC witness Woodcock's U&U conclusions are 

erroneous because they misinterpret the governing statutes and rules, as well as the intent of 

those statutes and rules. He noted that there is no statutory definition of U&U, describing the 

term U&U as a regulatory rate setting term for the cost of property that is included in a utility's 

rate base on which the utility is entitled to earn a rate of return. The balance of the cost of the 

proper@ that is excluded from rate base is refened to as non-U&U or future use plant Witness 

Seidman provided background on the U&U concept citing statutory provisions in Chapters 367 

and 403, F.S., as well as Rules 25-30.431, 25-30.432, and 25-30.4325, F.A.C., and how those 

statutes and rules evolved into the rules that were d e d in 1999 and 2008. 

Witness Seidman testified that this Commission has regulated warn and wastewater 

utilities shce 1959, and a common issue has been the determm& . 'on of "proper@ used and useful 

in the public seMce." A change was made to the statutory language in 1999 prohibiting us from 

imputing contributions in aid of construction against property U&U in the public service, 

pursuant to Section 367.081(2)(a)l., F.S. In additios language was added as Section 

367.081(2)(a)2., F.S., which requires us to consider property U&U if it is needed to serve current 

customers, as well as additional customers for five years after the test year or longer if supported 

by the evidence. 

Witness Seidman described our efforts to standardize or codify our approach to 

dete- U&U over the years, relying on our broad authority under Section 367.011, F.S., to 

liberally construe the statutes. Witness Seidman notes that our policy, developed through orders, 

internal memoranda, and workshops, ultimately led to the d cation of Rules 25-30.432 and 

25-30.4325, F.A.C., which address U&U for WWTPs and WTPs, respectively. He further notes 

that OPC was an active party in the rulemaking process. 

AUF witness Seidman agreed with witness Rendell that Am's de- . 'onofU&U 

complies with the methodology and intent of our des, and that a utility should be able to rely on 

approved U&U methodologies litigated and adjudicated in prior cases. If such reliance cannot 

be had, he alleged that regulatory uncertainty results. Witness Seidman testified that witness 

Woodcock's arguments in the instant docket are the same that he made in Docket No. 080121- 

WS, the last AUF docket, and in Docket No. 070183-WS, our U&U rulemaking docketz7 He 

asserted that the positions advanced by Woodcock were rejected by us in both of those dockets, 

which are now closed Further, witness Seidman disagreed with OPC's argument that U&U for 

each system must be relitigated in every rate case, and asserted that this is contrary to the intent 

26 sordhan states Utilities n/k/a Florida W ater s e~wCaWrationv.FIaF'ubficServl 

' 'ce Commissi on 714 So. 2d 

1046,1057 (Fb lstDCA 1998). 

- See order No. PsGO8-0328-FOF-WS, issued May 20,2008, in Docket No. 070183-WS, In re: Pro~osed adoDtion 

ofRule 25-30.4325. F.A.C.. Wate.r Trdmen t Plant Used and Useful Caldations.



PAGE 65 

of the governing rules. Finally, he stated that the rules in place are intended to reduce the need 

for experts to re-argue the same issues over and over. AUF witness Rendell testified that 

ignoring previously approved U&U methodologies and percentages will result in protracted 

disputes that ultimately lead to higher rate case expense for the customers. 

Witness Seidman test54 that reductions in consumption may decrease demand below 

plant design and previous production levels, but should not affect U&U calculations. He stated 

that the. plant is no less U&U than before those reductions occurred, even if mathematical 

calculations might show a Werent conclusion. While reductions in demand will result in a 

lower U&U number, he testi6ed that recognition must be given to providing service in a prudent 

manner, which would include changes in demand, whether demand goes up or down. A utility 

must provide safe, efficient, and suflicient service in accordance with good engineering practice 

and must also have shibiiity in its hancial position so that funding can be obtained at reasonable 

costs. Further, witness Seidman asserted that a utility must be ready to serve regardless of 

changes in market demand or its customer base. Finally, witaess Seidman concluded that 

witness Woodcock's approach of recognizing reductions in demand for U&U purposes did not 

make sense. 

In its brief, AUF argued that OPC's disagreement with the PAA Order's U&U 

determinations deviate h m Rule 25-30.4325, F.AC. AUF Bsserted that Witness Woodcock's 

reliance on the general provision of the rule dowing an dtemative U&U dculation under 

certain circumstan ces was misplaced Citing Palm Beach Canvassine. Board v. Harris, 772 So. 

2d 1273, 1287 (Fla 2000), AUF argued that the general provisions of paragraph 3 of the rule 

must yield to the specific provisions of paragraph 4. AUF also refuted witness Woodcock's 

position with respect to rounding up a U~ZU percentage. Citing a prior Commission orcier,2s 

AUF argued that considering a system 100 percent U&U when the applicable formula results in 

a U&U of 90 percent is a proper evaluation of costs that should be recognized as necessary to 

provide service to existing customers, taking into account prudence of investment, economies of 

scale, and other factors recogniwl in Rule 25-30.4325(2), F.A.C. 

OPC witness Woodcock testified that he made calculations based upon Rule 25-30.4325, 

FAC., for water systems, and relied on Section 367.081(2)(a), F.S., which provides that we 

shall consider property U&U in the public service when such property is needed to serve current 

customers, including an allowance for growth. He asserted that to provide a complete and 

thorough review of a utility during a rate case, U&U should be evaluated every time. Over time, 

there are. material changes in the growth of a service area, how the system is operated, and the 

usage patterns of the customer base. He also stated that there may be new or Werent 

information submitted that corrects inacmme information h m a prior rate case. He concluded 

that customers are bearing the full brunt of the risk associated with strauded capacity in systans 

with little or no growth, declining growth or decreased usage. The end result is higher rates for 

the customers who have no control over these factors. 

See Orda NO. PSC-O3-144O-FOF-WS, 

issued December 22,2003, m Docket NO. 020071-WS, In re: ADDhkiOll 

for a rate haease. in Marion Orawe. Pasco. pinellas. and Seminole Counties by Utilities. Jnc. of Florida

I 



PAGE 66 

Witness Woodcock kstitied that he disagreed with our prior decisions to round up to 100 

percent when an older system with little or no growth is calculated to be 95 percent U&U. He 

testiiied that this approach is not supported by any U&U rule and results in higher rates for the 

customers. OPC argued that our stalT has stretched the interpretation of Rule 25-30.4325, 

F.A.C., beyond its reasonable limits to determine systems to be 100 percent U&U where the 

systems are not built out and where a potential does exist for expansion of the service temtoq. 

Witness Woodcock noted thaf while we included a growth allowance for many of the AUF 

systems in the last rate case, since that time, the economy has undergone a recession and many of 

the AUF systems have experienced a decline in the growth factor. Further, noting the portions of 

Rule 25-30.4325(4), FAC., addressing reductions in flows related to consen& ‘on or a duction 

in the number of customers, witness Woodcock argued that the rules require that U&U be re- 

evaluated for systems where flows have decreased. Wituess Woodwck maintained that a change 

in the growth rate and a decliie in customer demand provided SUfFcient justiscation to 

reevaluate the overall U&U of all of the AUF systems. 

Another area of concern for witness Woodcock was determining whether a system is 

built out Witness Woodcock’s opinion was that a swing of 25 percent is an appropriate figure to 

use to account for incremental sizing of facilities and the differences between design estimates 

and actual usages. In the case where a service area appears to be built out with no apparent 

opportunity to expand the service, he proposed a recognition of 100 percent U&U for treatment 

faciities provided that the calculated U&U percentage is greater than 75 percent. If the 

calculated percentage is less than 75 percenf he. advocated using the calculated U&U percentage 

rather than recognizing a built-out condition, as contemplated under Rule 25-30.4325, F.A.C. 

He explained that original facilities could have been overdesigned, designed to serve a larger 

service area, land use might have cbauged h m the original concept, or the customer demand 

could be less than originally contemplated. Regardless of the reason, he concluded that there are 

large amounts of stranded capacity that will never be used by the customers and should be 

recognized in the U&U analysis. 

c. Other Intervenors 


issue. None of these parties included any argument on this issue in their respective briefs. 

2. Commission Analwis 

AUF and OPC agreed on the U&U percentages for all but 17 of AUF’s WTF’s. Table 1, 

set out above, reflects AUF’s and OPC’s U&U positions, as well as our approved U&U 

percentages for each of the WTPs that were not stipulated. As described above, the parties 

disagreed on issues related to reliance on prior Commission orders; the appropriate U&U 

determination for systems with one well; and the impact of reductions in demand, growth, and 

tire. flow on the U&U calculation. 

We believe that a utility should be able to rely on our approved U&U methodologies 

litigated and adjudicated in prior cases. Without such reliance, regulatory uncertainty results.

! 



PAGE 67 

Further, we believe that our intent in adopting Rule 25-30.4325, F.A.C., was to mitigate 

unnecessary litigation with respect to U&U issues. 

We are not permaded by witness Woodcock’s testimony that reliance on prior 

Commission orders is a race to increase U&U, with no real justiscation for doing so. It is the 

policy of this Commission to rely upon prior Commission Orders in addressing issues where the 

facts and circumstances are the same or similar. However, when there is a change .. in faciIities or 

operation of a system, we believe further evaluation is warranted in deterrrrrmng the appropriate 

U&U percentage. In the instant case, only two systems have experienced a change since the last 

rate case. The interconnection heen the Lake Josephine and Sebring Lakes system was 

made permauent and DEP now considers the two facilties one system; and one well was added 

at the Zephyr Shores water system. 

a. Svstems with One Well 

For the systems in dispute, AUF has four WTPs with one well each, including Breeze 

Hill, Fern Termce, Rosalie Oaks, and Twin Rivers. AUF‘s position is that pursuant to Rule 25- 

30.4325(4), F.A.C., a water treatment system should be considered 100 percent U&U if the 

system is served by a single well. AUF witness Seidman c haracm witness woodcock'^ 

testimony on U&U as his disagreement with the Commission’s des, speciscally Rule 25- 

30.4325(4), FAC., which states: 

A water system is considered 100% used and useful if the service territory the 

system is designed to serve is built out and there is no apparent potential for 

expansion of the service territory or the system is served by a single well. 

Noting our staffs recommendation in the U&U rule docket, Docket No. 070183-WS, 

dated March 27, 2008, p. 27, which recommendation was approved by us, witness Seidman 

quoted it as follows: 

The Commission has consistently found that systems with one well and systems 

that are built out with no apparent potential for expansion are lOO?? used and 

useful unless it appears that the system was not prudently de~igned.2~ These 

system, and there are hundreds of them in Florida, are typically built by 

developers to serve a relatively small area Staff believes that it is not efficient to 

require a sophisticated used and useful analysis to ascertillIl * whether these types of 

F, &% %&, orda NO. PW-%132O-FOF-WS, issued October 30, 1996, in Docket NO. 950495-WS, %LIG 

hlication fa rate increase and increase iLlm ‘ce availabm cbes bv Southern States Utilities. Inc. for 

OraneeOsceola Utilities. Inc. in Osceola Cow. and in Bradford Brevard charlotte. C h clw. Collier. Dwal 

Lake. Lee. Marion. Marhn . Nassau.Oranpe. osceola Pasco. putnam. Seminole. St Johns. St Lucie. 

Volusia and Washineton Comtiw p. 58 (finding that in systems with only one component [such as a single well], 

that component is considered 100 percent used and usefi19, rev’d on other mm&. Sou&ern S tates Urn es. &a 

Florida Water Senices Codon v. Fia Public Service Comdssion. 714 So. Zd 1046 (Fla 1st DCA 1998); and 

Order No. PScO3-144O-FOF-WS, p. 44 (6nding that it is not unreasonable or unusual for this Commission to 

consider dhiiution and collection systems that are 80% or more built omt to be 100% used and useful in instances 

where there is virmally no growth potential and the existing lines are the minimum size needed to sene the existing 

customas).



PAGE 68 

systems are oversized for the developments they are designed to serve. (Rather, a 

used and useful analysis should only be performed as an alternative when there is 

evidence indicating that the system may be oversized) 

In its brief, AUF argued that witness Woodcock’s testimony does not say that there is 

anything imprudent about these systems. Moreover, AUF that witness Woodcock’s 

exception to Rule 25-30.4325(4), F.A.C., generates the type of unnecessary costs and 

inefficiencies this Commission sought to avoid by adopting the rule. Therefore, AUF concluded 

that there is no basis to determine that AUF’s systems with one well are less than 100 percent 

U&U. 

Fern Tenace, Rosalie Oaks, and Twin Rivers were found 100 percent U&U in the last 

AUF rate case. AUF notes that the Breeze Hil system, now in its first rate proceeding under 

AUF ownership, was previously found 100 percent U&U in two prior Commission staff-assisted 

rate cases?’ Witness Rendell noted that OPC participated in both of those rate cases and did not 

appeal the U&U determinations from either case. In the 2001 Breeze Hill rate case, we found: 

The design criteria method of analysis represents the highest potential need that 

may be required of a system during any given peak day. Since this system bas 

only one well, no less than the actual capacity of 200 gpm could serve the existing 

customers. . . . We iind it unlikely that Breeze Hill Mobile Home Park. . . will 

ever contain 350 pmns to meet the requirement of Rule 62-555.315, Florida 

AdmiU&-& ‘ve Code, for a second well. 

(Order NO. PSC-02-1114-PAA-WS, p. 7) 

Witness Woodcock testified that he considered Breeze W, Fern Terrace, Rosalie Oaks, 

and Twin Rivers exceptions to Rule 25-30.4325(4), F.A.C. Relying upon the alternate 

calculation provision specified in Rule 25-30.4325(3), FAC., witness Woodcock indicated that 

he wanted to be sure that he was only considering systems where a further analysis would have a 

significant impact; therefore, he generated critexia to provide a conservative basis for isolating 

special cases. His criteria for calculating a U&U percentage for system with one well was that 

he considered whethex the supply well was rated at greater than 150 gpm and whether the 

calculated U&U was 75 percent or less. Witness Woodcock based his allowance of 150 gpm 

upon his experience as an engineer. Because single wells are allowed for smaller service areas 

of less than 150 service connections or less than 350 persons, expectationS are that single well 

system will have a low capacity. Using a design of 1 gpm per connection genady matches the 

1.1 gpm per COMectiOfl specised in our Rule 25-30.4325(7)(a), F.A.C., and equates to the 150 

service connections in DEP’s Rule 62-555.315, FAC. Because each of the four systems have 

well capacity of greater than 150 gpm, and the calculated U&U was less than 75 percens witness 

30 Order No. PScM-1114-PAA-WS, issued August 14,2001, in Docket No. 011481-WS, In re: Amfiation for 

staff-a~~isted rate ca~e UI Polk COunN bv Bi &a E- . Inc. d/b/a Brewe Hill Utilities. holder of Certificate 

Nos. 598-W and 513-S: Order No. PSC-99-2394-FOF-WS. issued December 7, 1999. m Docket No. 990356-WS rn 

m A~~licatim for staff-assisted rate casc m Polk Counfv Lw Bieber Entermt .sa. Inc. d/b/aBrewe Hill Utilities.



PAGE 69 

Woodcock conducted M e r evaluation, &ding Breeze W, Fern Terrace, Rosalie Oaks, and 

Twin Rivers to be 26,68,12, and 24 percent U&U, respectively. 

Breeze W, Fern Terrace, Rosalie Oaks, and Twin Rivers each have one well, with 

capacities ranging h m 177 to 268 gpm, and each system serves approximately 100 customers. 

The parties agree that each of these systems have bad no siflcant growth in the past five years. 

We found each of these systems to be 100 percent U&U in prior rate cases. 

We have consistently found that systems with one well are 100 percent U&U unless it 

appears that the system was not prudently desi& We agree with witness Seidman’s reference 

to the justiscation provided when Rule 25-30.4325, FAC., was adopted. It is not efficient to 

require a sophisticated U&U analysis to ascertain whether these types of systems are oversized 

for the developments they are designed to serve. Rather, a U&U analysis should only be 

performed as an alternatve when there is evidence indicating that the system may be oversized 

We also agree with AUF’s argument that OPC omed no teslimony to suggest that the 

four systems with one well were imprudently designed. Rather, OPC relied on two criteria, 

whether the supply well was rated at greater than 150 gpm and whether the calculated U&U was 

75 percent or less. While witness Woodcock characterized these criteria as conservative, we are 

not persuaded that those criteria should be used to determine whether to apply Rule 25- 

30.4325(4), FAC. Further, as with most of AUF’s WTPs, these systems were constructed more 

than 30 years ago and have experienced no signjjicaut growth in the past five years. Therefore, 

we find that Breeze HiU, Fern Terrace, Rosalie Oaks, and Twin Rivers are 100 percent U&U, 

consistent with our prior decisions and Rule 25-30.4325(4), FkC. 

b. Svstems with Growth 

Only four AUF WTF’s that were not stipulated in this proceding have experienced any 

signjjicant growth in the past five years, including carlton Village, Picciola Island, Venetian 

Vie, and Welaka. Both AUF atld OPC provided U&U calculations for these four systems. 

However, AUF’s position was to rely on the bigher U&U finding in Docket No. 080121-WS and 

OPC’s position was to rely on a new calculation based on the peak demand in the test year. 

AUF’s position was that Carlton Village is 95 percent U&U, Picciola Island is 75 percent 

U&U, Venetian Viage is 74 percent U&U, and Welaka is 80 percent U&U, as reflected in 

Docket No. 080121-WS. As previously discussed, AUF maintained it was entitled to regulatory 

certainty and, therefore, that we should use our previously approved U&U methodologies and 

resulting percentages in determining the correct amounts of U&U for these water systems. 

Witness Seidman recognized that water and wastewater utilities were subject to reductions in 

consumption by customers, and even a loss of customers, as a result of conservation efforts and 

events beyond the control of a utility. When this happens, demand may decrease to something 

less than that for which it was prudently designed and less than levels it had previously served. 

According to witness Seidman, we already recognize the impact of redud consumpCon on 

revenue requirements by adjusting billed consumption with a repression adjustment. Witness 

Seidman testified that putting witness Woodcock’s approach into practice would be inconsiStent 

with the efforts made by this Commission and Florida’s Wh4Ds to promote conservatioa



PAGE 70 

According to witness Seidman, we have a responsibility to the utility, as well as to the customer, 

which is precisely why we have consistently recognized that a utility company should not be 

penalid for incuning prudent investment to provide capacity to its customers, even if the 

customers or consumption is then reduced for f&ctors beyond a utility's control. When there is a 

&meax. in demand, a utility's facilities are still providing service to the customers. Witness 

Seidman teaed that Witness Woodcock was certainly correct that go% through the 

mathematical exercise. of dividing demand by capacity will result in a lower number, but stated 

that recognition must be given to providing service in a prudent mmner. %at means be- 

ready to serve when demand changes, up or down. Witness Seidman testified that witness 

Woodcock's approach would mean that a utility could recover costs when demand goes up, but 

not recover costs when demand goes down. 

OPC's position was that Carlton V i e is 91 percent U&U, Picciola Island is 56 percent 

U&U, Venetian Village is 63 percent U&U, and Welaka is 74 percent U&U. Witness Woodcock 

recommended that we recognize changes in system demand, including diminished demand, in 

U&U calculations. For the Carlton Village and Venetian Village water system, witness 

Woodcock pointed out that the growth factors had derreased since the last rate case. He also 

noted that for Picciola Island and Welaka, while the growth rates increased since the last rate 

case, the customer usage declined to the extent that the calculated U&U p-tages for this 

prowding are less than in the prior rate case. 

We are not persuaded by witness Woodcock's argument that diminished flows should be 

relied on in dete- the appropriate U&U percentage for system. W e Rule 25- 

30.4325(3), FAC., provides for consideration of a decrease in flows, the rule also provides for 

consideration of whether the investment was prudent OPC did not demonstrate that the system 

were not prudently designed. Further, we find that we should not reduce a system's U&U 

percentage merely due to a reduction in flow. Rather, we shall recognize the greater demaud that 

was relied on when the higher U&U percentage was previously approved in the prior case. 

However, we note that AUF's proposed U&U percentages for Carlton Viage, Picciola 

Island, and Venetian Village, were not fuuy litigated in Order No. PSC-09-0385-FOF-WS, but 

were stipulated3' In Order No. PSG96-1320-FOF-WS, issued October 30,1996, in Docket No. 

950495-WS after a full evidentiary hearing, we found all tbree WTPs to be 100 p n t U&U. In 

this rate case, AUF requested that the Carlton Village, Picciola Island, and Venetian Village 

systems be considered 95,75, and 74 percent U&U, respectively. Clearly when there has been a 

change in circumstances, a change in structure or operations, or if we have made a mistake, then 

we should revisit the calculation. We do not believe the U&U percentages approved in the prior 

rate case should be reduced. As a result of a change in flows, because AUF proposed lower 

U&U percentages than were previously approved, we find that AUF's proposed U&U 

percentages for Carlton Viage, Picciola Island, and Venetian Viage shall be approved. 

For the Welaka WTP, the U&U percentage was fully litigated in Docket No. 080121-WS 

and found to be 79.72 percent U&U. Again, where there has been no structural or operational 

31 - Set Order No. PSC-09-0385-FOF-WS, p. 36.



PAGE 71 

change, but merely a reduction in flows, we find that the U&U determm& . ‘on from the prior rate 

case shall not be reduced See. e.& Order No. PSC-03-1440-FOF-WS32 (“When a rate case is 

filed, prior Commission orders involving the same systems or system components from prior rate 

cases should be reviewed and considered as part of the analysis in the current rate case 

proceeding.”). As AUF witnesses Rendell and Seidman both testified, thae have been no 

material structural or operational chauges to AUF’s systems since the last rate case to justify 

deviating h m our previously approved U&U methodologies and resulting percentages. In 

summary, we hd that Carlton Village, Picciola Island, Venetian Vie, and We& shall be 

considered to be 95,75,74, and 80 percent U&U, respectively. 

c. systems WIthOut Growth 

The parties agree that the nine remaiDing AUF systems that were not stipulated in the 

current proceeding have had no signiscant growth since the last rate case, including Arredondo 

Estates, Arredondo Farms, East Lake Harris/Friendly Center, Hobby Hills, Interlachdark 

Manor, Lake JosepWSebring Lakes, Silver Lake EstatesrWestem Shores, Tomoka, and 

Zephy Shores. Witness Rendell’s testimony and exhibits reflect that six of the water systems. 

including Arredondo Estates, Arredondo Farms, East Lake HarridFriendly Center, Hobby Hills, 

Interlachdark Manor, and Tomoka, were considered built out and therefore 100 percent U&U 

in Docket No. 080121-WS and there have been no changes in the structure or operation of those 

systems since tbat case. In addition, witness Rendell testZed that, although a second well was 

added to the Zephyr Shores system to comply with DEP Rule 65-555.315(2), F.A.C., which 

quires community systems serving more than 350 persons to have more than one well, the 

number of customers served by the Zephyr Shores system has declined over the past 14 years. 

AUF argued that Rule 25-30.4325(4), F.AC., and Commission precedent requke that these 

systems be treated as 100 percent U&U unless the system was not prudently designed- Further, 

AUF asserted that because witness Woodcock did not testify that there is anything imprudent 

about these systems, each of these seven water systems should be considered 100 percent U&U 

in the current case. 

Witness Rendell testified thaf in the last two rate cases, while the Lake Josephine and 

Sebring Lakes systems were interconnected, the interconnection valve was not open. 

Subsequently, the interconnection valve has been opened and became permanent in order to 

address pressure concern in one small section of Lake Josephine and improve the reliability of 

service of both systems. The opening of the valve did not add any additional capacity to the 

treatment system. In the last rate case, the Lake Josepbine system was found 92 percent U&U 

and the Sebring Lakes system was found 45 percent U&U. AUF proposed that the combined 

Lake JosephindSeIning Lakes system be considered 85 percent U&U based on the weighted 

average U&U percentages found in the last rate case for the two systems. AUF refuted witness 

Woodcock‘s proposal to eliminate fire flow from the U&U calculation, relying on prior 

commission orders allowing fire flow, even for systems with limitations on the amount of fire 

flow available. However, it should be noted that AUF did not include fire flow in its U&U 

calculation, nor was fire flow included for tbis system in Docket No. 080121-WS. 

- See OrderNo. PSC-03-1440-FOF-WS, p. 38.



PAGE 72 

The Silver Lake Estates/Western Shores system was found 93.71 percent U&U in Docket 

No. 080121-WS, recognizing that the system was experiencing some growth There has been a 

significant reduction in demaud, no significant growth, and no change in the structure or 

Operation of the system since the last rate case. Therefore, AUF proposed that Silver Lake 

Estateslwestem Shores be considered 94 percent U&U, consistent with our finding in that rate 

case. 

OPC's position was that these nine water systems should be considered less than 100 

percent U&U. Witness Woodcock testified that: Arredondo Estates is 80 percent U&U, 

Arredondo Farms is 61 percent U&U, East Lake HarrisflFriendly Center and Hobby Hills are 

both 41 percent U&U, hterlachdark Manor is 76 percent U&U, Lake JosepfidSebring 

Lakes is 25 percent U&U, Siver Lake EstakdWestem Shores is 74 percent U&U, Tomoka is 43 

percent U&U; and zephyr Shores is 26 percent U&U. 

As previously discussed, Witness Woodcock tedfied that he was concerned with the 

reliance on build out and prior Commission orders as appropriate justifications for .finding 

systems 100 percent U&U. Refening to our PAA Order, he noted that the phrase ''prior order" 

was relied upon 38 times to justify a U&U percentage higher than a calculation would supporS 

while the term "built out" was used 26 times. He noted that there have been material chges to 

many of these systems since the last rate case that affect the U&U calculations, especially in the 

mofgrowthanddemand. 

Witness Woodcock also testified that, as previously discussed, for systems with a 

calculated U&U percentage of less than 75 percent, such a dif€erence goes beyond the expected 

variability of planning and design, leaving large amounts of stranded capacity that will never be 

used. Witness Woodcock testified that the actual U&U calculation should be used when it 

dts in a U&U of 75 percent or less for systems such as Tomoka and Zephyr Shores. 

Noting that the U&U calculations for the Arredondo Estates, Arredondo Farms, and 

hterlachdark Manor didbution system showed that portions of the distribution systems are 

available for new connections, witness Woodcock testifled that it is completely incongruous and 

unreasonable to kd those systems built out and, therefore, 100 percent U&U. Therefore, he 

stated that reliance on the prior order &ding the WTPs 100 percent U&U should not be allowed. 

Witness Woodcock testified that the Lake JosepbindSebrhg Lakes system should be 

considered 25 percent U&U. OPC's position is that, as interconnected systems, there are 

signiscant cbanges to the FRC of the water treatment system which has a direct impact on the 

U&U calculation. Further witness Woodcock did not support the provision of fire flow for a 

water plant unless lines are pruperly sized and there are sufficient hydrants to actually provide 

seMce to the entire service area He argued that if all the customers do not benefit from the 

provision of fire flow, that capacity is not U&U for all customers. Similarly, witness Woodcock 

stated that fire flow should be excluded hm the U&U calculation for the Silver Lake 

EstateslWestern Shores system, making the system 74 percent U&U. 

Witness Woodcock testified that, pursuant to Rule 25-30.4325(4), FAC., both the design 

s&ce m must be built out and there must be no potential for service area expansion in order



PAGE 73 

to be considered 100 percent U&U. He provided aerial photos of the East Lake HarriSlFriendly 

Center and Hobby Hills service areas to demonstrate that those systems have significant 

developable land within AUF’s service territory that is available for potential expansion. He 

Mer testified that there do not appear to be any other utilities in the area that could easily 

provide service to the properties. Witness Woodcock asserted that the second part of the 100 

percent built-out test has not been met became there is the abiity for the utility to expaud. 

Therefore, witness Woodcock recommended performing a U&U calculation for each of these 

WTPs, which results in each of the two systems beii 41 percent U&U. 

The parties agree that nine AUF water systems have had no significant growth in the past 

five years, including Arredondo Estates, Anedondo Farms, East Lake HanidFriendly Center, 

Hobby Hills, Interlachdark Manor, Lake JosephindSebring Lakes, Silver Lake 

EstatedWestem Shores, Tomoka, and Zephyr Shores. AUF’s position is that all of these 

systems, with the exception of Lake JosepWSebring Lakes and Silver Lake EstatedWestern 

Shores should be considered 100 percent U&U, consistent with our decision in the last rate case. 

Further, AUF asserted that Silver Lake EstatedWestem Shores, is 94 percent U&U, consistent 

with our decion in Docket No. 080121-WS and Lake Josephine/Sebring Lakes is 85 percent 

U&U based on the weighted average of the U&U calculation for the two systems in that rate 

case. OPC’s position was that U&U should be recalculated for each of these nine system. 

Consistent with our previous analysis, we find that the six water systems that have had no 

changes in the structure or operation of those systems since Docket No. 080121-WS and were 

considered built out and therefore, 100 percent U&U in that case shall be considered 100 percent 

U&U in the currenl rate case, consistent with Rule 25-30.4325(4), F.A.C., and our prior 

decisions. Despite OPC’s arguments to the contrary, while there is some vacant land available 

for development in the East Lake HanidFriendly Center and Hobby W s 

service territories, 

based on the lack of growth and age of those system, as well as our prior kdings that the 

systems were built out, we find that those systems shall continue to be considered 100 percent 

U&U. The WTPs serving these systems are more than 30 years old 

Although a well was added at the Zephyr Shores water system to comply with DEP’s 

des, we believe the system is built out, as demonstrated by a decline in comections in the past 

14 years. The system, which is more than 30 years old, was considered 100 percent U&U in 

Docket No. 080121-WS. Therefore, because the Zephyr Shores seMce area is built out and no 

evidence was presented to indicate that the system was not prudently designed, the WTF’ shall be 

considered 100 percent U&U, consistent with Rule 25-30.4325(4), F.A.C. 

The Silver Lake EstakdWestem Shores system was found 93.71 percent U&U in Docket 

No. 080121-WS. There bas been no signiscant growth in customers, a signiscant reduction in 

demand, and no change in the structure or operation of the system since the last rate case. 

Therefore, the system shall be considered 94 percent U&U, consistent with our decision in 

Docket No. 080121-WS. Further, we do not accept OPC’s argument that fm flow should be 

excluded from the U&U calculation because all customers do not benefit from the fire flow. 

Pursuant to Rule 25-30.4325(1)(~), F.A.C., when fire flow is provided, a minimum of either the 

fire flow required by the local governmental authority or two hours at 500 gpm shall be included



PAGE 74 

in the U&U calculation. We have consistently included 6re flow in the U&U calculation over 

OPC's objections, even when there were few hydrants in, the service area. 

In Docket No. 080121-WS, we found Lake Josephine to be 92 percent U&U and Sebring 

Lakes to be 45 percent U&U. Subsequently, a valve in the existing interconnection between the 

two systems was permanently opened to improve pressure and reliabiity. The U&U calculation 

proposed by OPC reflects the requirement in Rule 25-30.4325(6), FAC, that the largest well be 

moved to determine the FRC. However, in the prior rate case Lake Josephine and Sebriug 

Lakes were considered separate systems and the largest well was removed ffom each system. 

The FRC (denominator) is much higher in OPC's calculation, based on removing only one well 

for both systems, than in the prior case, resulting in a significantly lower U&U calculation. 

While the Lake JosephindSebring Lakes systems are now combined as one system, we find that 

opening the valve and making the existing interconnection permanent shall not result in a 

reduction to the U&U percentages found in that case. The permanent interconnection adds 

increased reliabity to both systems. Based on our decision in Docket No. 080121-WS, we find 

that a weighted average 85 percent U&U shall be approved for the Lake JosepWSebring 

Lakes WTF'. 

d Commission Conclusion 

All of the AUF WTPs that were not previously stipulated shall be considered 100 percent 

U&U, with the exception of the six systems shown on Table 1. The resulting composite U&U 

percentages, based on the number of customers in each rate band, are shown on Attachment 1. 

Further, the rate base adjustments are shown on Schedule 3-C and the depreciation expense and 

property tax adjustments are shown on Schedule 4-C. 

C. U&U for Protested Water Distribution Systems 

We do not have a rule that specities how the U&U determbfion for water distribution 

systems is to be made. Our practice has been to compare the customers (or ERCs) receiving 

service to the lots with service available. In addition, a growth allowance may also be included 

in the U&U calculation, pursuaut to Section 367.081(2), F.S. 

While the parties agreed on the U&U percentages for 32 of AUF's water distribution 

systems, there is disagreement with respect to the following 26 distribution systems: Arredondo 

Estates, Beecher's Point, Breeze HiU, Gibsonia Estates, Interlachdark Manor, Kingswood, 

Oakwood, Orange WSugar Creek, Palms Mobile Home Park, Palm Port, Peace River, Pney 

Woods, Ravenswood, River Grove, Rosalie Oaks, Silver Lake EstateslWestan Shores, Silver 

Lake Oaks, Skycrest, Stone Mountain, Sunny Hills, Twin Rivers, Venetian Village, Village 

Water, Welaka, Wootens, and The Woods. Many of the parties' arguments are the same or 

similar to the arguments related to the appro- U&U determuLa tion for WTPs, including 

reliance on prior Commission decisions, 

. 'on as to whether a system is built out, and 

rounding up the U&U percentage. Table 2, below, contabs a summary of AUF's and OPC's 

proposed U&U percentages, along with OUT approved U&U pemntags for each of the 

distribution systems in dispute. Attachment 2 reflects, by rate band, the details of AUF's and



PAGE 75 

OPC’s U&U positions, as well as our approved percentages for each of the 26 water distribution 

systems that were not stipukd. 

1. Parties’ Armun ents 

e 

Consistent with AUF’s position with respect to the appropriate U&U percentages for 

WTPs, AUF argued that we should rely on the U&U percentages for the water distribution 

systems found in Docket No. 080121-WS. Witness Re~~kll testi&d that AUF used the same 

methods as were approved in that case. Witness Rendell te~ed that regulatory certainty is a 

core principle for any regulated utility and asserted that ignoring the last approved U&U 

percentages undermines that certainty. In its briec AUF argues that considering a builhut 

system to be 100 percent U&U is a practice rooted in the history of Florida’s water and



PAGE 76 

wastewater system development and properly includes evaluation of cost that should be 

recognized as newsmy to provide service to existing customers withinthe service area 

AUF witness Sei& testified that a utility must be ready to serve regardless of changes 

in market demand or its customer base and noted that the system layout should also be 

considered He concluded that even when every lot is not served and might never be served, a 

distribution system must be continuous and for all those reasons, it would be reasonable to 

conclude that a system is 100 percent U&U whether all lots are occupied. Wituess Seidman 

asserted that it should never be concluded that simply because a calculated percentage was less 

than 100 that areduction should be made to U&U. 

Witness Seidman testiiied that, while we have historically relied upon a lot cod method 

(comparinp the number of lots served with lots with service available), that method has not been 

d e d in a rule. Further, We the lot count method is a starting poink the system layout 

should also be considered. He cautioned about relying solely on a lot count calculation and 

suggested that judgment should be considered Citing a prior Commission decision, AUF argued 

that distribution and collection systems should be considered to be 100 percent U&U that are 80 

percent or more built out, where there is no real growth potential, and the existing lines are the 

minimum size needed to serve exiStinp customers." AUF argued that the U&U determination 

for distribution and collection lines should be the same as for electric, gas, and telephone. That 

assessment focuses on whether they are reasonably necessary to provide service within the 

servicearea 

Wituess Rendell noted thaf in the last rate case, OPC had stipulated to the U&U 

percentages for the disttibution system at InterlachedPark Manor, Stone Mountain, and Sunny 

Hills, but protested those percentages in this case, despite there being no operational or structural 

changes to those systems since the last rate case. In addition, the Breeze Hill distribution system 

was previously found 100 percent U&U in the two prior staff-assisted rate cases. OPC 

participated in those cases and did not appeal those decisions and there have been no structural or 

operational changes to the system since the last rate case. Further, witness Rendell asserted that 

the Fairways and Peace River systems are built out with no possibility for expansion; thus, 

consistent with our practice, those distribution systems shall be considered to be 100 percent 

U&U. 

Consistent with its position with respect to U&U for WTPs, OPC meed that the U&U 

percentage for distribution systems should be re-evaluated for each new rate case to produce the 

most accurate percentage. OPC argued that the U&U percentage should not be rounded up, but 

only rounded to the nearest full single percentage point to avoid overstatkg the U&U 

percentage. Further, OPC argued that the U&U percentage should be based on a comparison of 

"See ordus No. PSG09-0385-FOF-WS; No. PSC-l04585-PAA-WS, issued September 22,2010, in Docket No. 

090462-WS, In re: ADDlication for in- in water and wastewater rates bv Utilities. Inc. of Florida; and Order No. 

PSC-074505-SGWS. issued June 13.2007. in Docket No. OM1253-WS. In re: ADDlication for kncrease in water and 

wastewaterratesinMmion.&aug e. Pasco. Pinellas. and Seminole coudties bv Utilities hc. of Flnida



PAGE 77 

the total number of lots with active customers to the total number of lots served by the 

distribution system. 

Witness Woodcock testified that our reliauce on prior decisions and findings that systems 

were built out resulted in U&U percentages that were higher than the calculated U&U 

percentages. For example, witness Woodcock noted that Rosalie Oaks was considered to be 100 

percent U&U in the PAA Order, based on a prior Commission decision, when AUF, OPC, and 

our staffhad calculated the U&U percentage to be 80 percent 

Witness Woodcock agreed with using the lot count methodology unless the service 

territory includes commercial and multi-family customers, in which case the total number of 

customefi served should be compared to the total number of potentid customers to be sewed at 

buildout, based on the seMce area maps, for both distribution and collection systems. Witness 

Woodcock relied on the latter methodology in evaluating the Jungle Den collection system, 

which has several lots with multi-family customers; however, he did not rely on that 

methodology for any of the distribution systems that are in dispute. 

c. other Intervenolx 




AUF and OPC agreed on the U&U percentages for all but 26 of the AUF water 

distribution system. Table 2 reflects Am’s and OPC’s U&U positions, and our approved U&U 

percentages for each of the distribution systems that were not stipulated. 

As previously discussed, it is our policy to rely on our prior decisions when there has 

been no chauge in the operating capacity of the system since the last rate case. In AUF’s 2008 

rate case, we found that a system fully developed as planned, without potential for expansion, 

with minimal or no growth, few vacant lots, and small distribution lines shall be considered to be 

100 percent U&U. We further concluded that distribution system that had a growth factor of 

1.05 or less were considered to be 100 percent U&U. Ofthe 26 distribution systems that were 

not stipulated in the current proceedin& 14 were found 100 percent U&U in Docket No. 080121- 

WS, including Arredoado Estates, Beecher’s Poi& &%Sonia Estates, Kingswood, Orange 

WSugar Creek, Palm Port, Piney Woods, Ravemood, River Grove, Rosalie Oaks, Silver 

Lake EstatedWestem Shores, Skymest, Twin Rivers, and V i Water. 

Again, we do not accept OPC‘s arguments regarding reevaluating systems in each rate 

case or its concerns with regard to finding a system to be 100 percent U&U when vacaut lots 

exist. As with WTPs, when systems are not experiencing growth, especially when a system is an 

older system, it is likely that a built-out condition exists. Finding a system to be 100 percent 

U&U is appropriate when the system is the minimum size necessary to serve the development or 

when the system is otherwise built out Therefore, the 14 distribution systems that were



PAGE 78 

considered to be 100 percent U&U in Docket No. 080121-WS shall be considered to be 100 

percent U&U in the instant docket. We also k d that the Breeze HiU and Peace River 

distribution systems shall be considered built out and, therefore, 100 percent U&U. Further, 

while the Oakwood system was found to be 97 percent U&U in Docket No. 080121-WS, it now 

appears to be built out and, therefore, shall be considered 100 percent U&U. We do note that 

Oakwood was found to be 100 percent U&U in Ordex No. PSC-96-132O-FOF-WS, in Docket 

NO. 950495-WS. 

For two of the distribution systems, Palms Mobile Home Park and Wootens, we find that 

the systems shall be considered to be 88 and 66 percent U&U, respectively, consistent with our 

decision in Ordex No. PSC-09-0385-FOF-WS, in Docket No. 080121-WS. For the remaining 

seven distribution systems, including Interlachenpark Manor, Silvex Lake Oaks, Stone 

Mountain, Sunny Hills, The Woods, Veneiian Viage, and Welaka, we find the systems shall be 

considered to be 78,87,46,10,76,85, and 52 percent U&U, respectively, based on calculations 

h m data filed in this case, comparing the number of lots served to lots with service available. 


All of the AUF water distribution systems that were not previously stipulated shall be 

considered to be 100 percent U&U, with the exception of nine systems (see Table 2, above). 

Attachment 2 contains our approved U&U percentages and the resulting composite U&U 

percentages based on the number of customers in each rate band. Further, the rate base 

adjustments are shown on Schedule 3C and the depreciation expense and property tax 

adjustments are shown on Schedule 4-C. 

D. U&U and Comwsite U&U for Protested Wastewater Facilities 

Rule 25-30.432, F.A.C., provides that the U&U percentage for a WWTP is determined by 

dividing the numerator, which includes customer demand plus a growth allowance less excessive 

infiltration and inflow @&I), by the permitted capacity of the WWI". The customer demand 

shall be the same basis as the permitted capacity. The rule also provides that we will also 

consider other factors, such as the extent to which the area served by the plant is built out, 

whether the permitted capacity differs from the design capacity, whether thexe are differences 

between the actual capacities of the individual components of the wastewater Merit plant and 

the permitted capacity of the plant, and whether the flows have decreased due to conservation or 

a reduction in the number of customers. The appropriate adjustments for I&I have been 

stipulated by all parties, as shown in PAA Issue 8 in the Appendix. 

OPC protested the U&U percentage adjustments for 20 of AUF's 27 WWTPs, including 

Arredondo Farms, Breeze Hill, Fairways, Florida Central Commerce Park, Holiday Haven, 

Jungle Den, Kings Cove, Leisure Lakes, Morningview, Palm Port, Peace River, Rosalie Oaks, 

Siver Lake Oaks, South Seas, Summit Chase, Sunny Hills, The Woods, Valencia Terrace, 

Venetian Vie, and Village Water. Table 3 contains a summary of AUF's and OPC's 

proposed U&U percentages, along with our approved U&U percentages for each of the systems



PAGE 79 

in dispute. AUF’s and OPC’s U&U calculations, ow approved U&U percentages, and the 

resulting composite U&U percentages are shown, by rate band, on Attachment 3. 

summitchase loo ~ 36 100 

slmnyws 49 23 49 

The Woods 100 61 100 

Valencia Terrace 100 40 100 

Venetianvie 100 49 100 

Village Water 79 64 79 

1. Parties Arguments 

Many of the U&U assertions for WWTps provided by AUF witnesses Rendell and 

Seidman and OPC Witness Woodcock me the same as those relied on in addressing U&U for 

WTPs discussed above, including reliance on prior Commission decisions and the impact of 

growth trends and reductions in demand on the U&U calculation. 

AUF’s position is that we should approve the U&U percentages approved in the PAA 

Order for all of the WWTPs. Those percentages are consistent with the U&U percentages 

approved by us in Docket No. OSO121-WS, with the exceptions of Breeze Hill, Peace River, and 

Fairways, which were not included in that case, as well as Village Water, for which AUF 

proposed an increased U&U percentage fiom that case.



PAGE 80 

For the Breeze Hill system, witness Rendell advocated that we rely on two prior &E- 

assisted rate cases in which the Breeze HiU WWTP was found to be 56.3 percent U~LU?~ 

Quoting fium the prior Breeze Hill rate case order, he noted that we found that land that was 

once planned for potential development has reverted back to agricultural status and the 

probability of expanding plant beyond its c-t capacity is unlikely, makiug the WWTP 

valuable to only the existing subdivision. Witness Rendell noted that OPC participated in both 

of those rate cases and did not appeal the U&U detemhtions in those cases. Further, there. 

have been no operational or structural chaoges to the Breeze Hill system since the last rate we. 

In addition, witness Rendell testified that the Fairways and Peace River systems, which were not 

included in the last AUF rate case, are completely built out with no possibility of expansion and 

should be considered to be 100 percent U&U. 

As previously discussed, witness Seidman testified that we recognize that, when there is a 

reduction in usage by customers, the plant is no less U&U in the public service than it was before 

the reduction in demand Citing prior Commission orders, witness ~eidman~' testified that we 

have consistently recognized that a utility company should not be penalized for incurring prudent 

inveslment to provide capacity to customers when the customers or consumption is then reduced 

based on factors beyond the utility's control. 

OPC's position is that we should re-evaluate U&U for each system in every rate case 

based on changes in pht, demaud, or growth. Witness Woodcock testified that Rule 25-30.432, 

FAC., requires that the U&U percentage for WWTPs be reevaluated for systems where flows 

have decreased. Relying on the flows contained in the DMRs, he found some instances where 

the flows listed in the sling did not match the DMRs that he reviewed, but in most cases there 

was no significant difference. He also referred to DEP's operating pennits ~LuI, where Merent 

capacities were listed for treabnent and disposal, separate U&U calculations were. made and the 

larger of the two U&U values was used He recommended that actual calculated percentages be 

relied p n for rate setting. 

Witness Woodcock testified that if the U&U calculation for a collection system was less 

than 100 percent, that was an indication that there are vacant lots available for new c~mections, 

and thw the WWTPs should not be considered built out nor 100 percent U&U. For example, 

The Woods WWTP was 100 percent U&U in the PAA Order based on the system being built out 

even though the calculated U&U was 75 percent for the plant and 71 percent for the collection 

system. Witness Woodcock argued that there are lots available for new growth and 

recommended that his calculation of 61 percent be used for The Woods WWTP. Similarly, he 

argued that the Fairways, Jungle Den, Peace River, and Rosalie Oaks WW"Ps, which were 

previously considered to be 100 percent U&U based on the systems being built out, should be 

considered to be 42,37,56, and 50 percent U&U, respectively, based on his U&U calculations 

for those WWTPs, recognizing that those systems also have vacant lots. 

See Order No. PSC-02-I 114-PAA-WS. and Order No. PSC-99-2394-FOF-WS. 

"%ness Scidman cited Order Nos. PSC-O9-0385-FOF-WS, PSG10-0585-PAA-WS, and PSC-07-0505-SGWS, 

which were also cited earlier in tbis Order.



PAGE 81 

Consistent with his assertions regarding WTPs, witness Woodcock advocated that if a 

U&U calculation results in less than 75 percent, then a sy- should not be considered built out 

and a U&U adjustment should be made. Witness Woodcock believes that an allowance of 25 

percent is ressonable to account for mismatch es between design capacity and actual demand He 

opined that these differences could result from facilities that were designed to serve a larger 

senice area than what is certificated, a land use change from the origiual concept, overdesigned 

faciities, or a customer base tbat requires less senice than originally contemplated. Based on 

this reasoning, witness Woodcock recommended that eight systems that were found 100 percent 

U&U in the last rate case, including Arredondo Farms, Florida Central Commerce Pa& Kings 

Cove, Morningview, South Seas, Summit Chase, Valencia Terrace, and Venetian Village, be 

considered to be 66,41,46,33,40,36,40, and 49 percent U&U, respectively. 

For the remaining seven WWTPs, witness Woodcock relied on a new calculation for 

U&U, instead of relying on the higher U&U calculation found in a prior rate case, arguing that 

the reductions in demand since the last rate case should be reflected in the new U&U 

calculations. He recommended that those systems, including Breeze Hill, Holiday Haven, 

Leisure Lakes, Palm Port, Silver Lake Oaks, Sunny W s, and Village Water be considered to be 

24,62,32,51,34,23, and 64 percent U&U, respectively. 

c. Other Intemenors 



2. Commission Anah, sis 

As previously discussed, our policy is to rely on U&U decisions in prior orders when 

there has been no change in the facilities or operation of a system. We believe that a reduction in 

demand shall not be relied on to require a new U&U calculation. Performing a new U&U 

calculation in each rate case and ignoring prior decisions ignores the importance of regulatory 

certainty and results in costly evaluations, particularly when there has been no change in the 

facilities or operation of a system. This does not preclude us from correcting any errors which 

may have been made in prior proceedings. 

Eleven of the systems protested by OPC were found to be 100 percent U&U in Docket 

No. 080121-WS, including Arredondo Farms, Florida Central Commerce Park, Jungle Den, 

Kings Cove, Morningview, Rosalie Oaks, South Seas, Summit Chase, The Woods, Valencia 

Tenace, and Venetian Village. With no evidence to support a change in facilities or operation of 

any of them systems, we tind that these systems shall be 100 percent U&U because they are. 

essentially built out with no apparent pote.ntial for expansion. In addition, the Fairways and 

Peace River system, which were not included in AUF’s last rate case, shall be considered 100 

percent U&U because the service areas appear to be built out with no apparent potential for 

expansion. 

The U&U percentages for the Palm Port, Silvm Lake Oaks, and Sunny Hills WWTPs 

were stipulated in Docket No. 080121-WS. Therefore, we hi that the U&U percentages



PAGE 82 

requested by AUF for those systems, 58,42, and 49 pe.rcent, respectively, which are less than or 

equal to the U&U amounts approved by us in Docket No. 950495-WS, shall be approved. In 

ad&tion, rather than rely on the stipulated percentage h m Docket No. 080121-WS for the 

Holiday Haven system, we 6nd that AUF’s and OPC’s calculated U&U amount of 62 percent 

shall be recognized. For Leisure Lakes, AUF requested 39 percent U&U based on our decision 

in Docket NO. 080121-WS. Because that decision was based on a stipulation, we find that we 

should rely on our decision in Docket No. 950495-WS, where the plant was found to be 38 

percent U&U. For V i e Water, we find that AUF’s U&U calculation of 79 percent shall be 

approved, based on the system’s peak demand and a growth allowauce. Finally, the Breeze Hill 

WWTP shall be considered to be. 56 percent U&U based on our decision in the two prior Breeze 

Wrateca~e~: 

DocketNos. 990356-WS andO11481-WS. 


All of the AUF WWTPs that were not previously stipulated shall be considered 100 

percent U&U, with the exception of seven systems (see Table 3). The seven systems, Breeze 

Hill, Holiday Haven, Leisure Lakes, Palm Port, Silver Lake Oaks, Sunny Hills, and V i e 

Water WWTPs, shall be considered to be 56, 62, 38, 58, 42, 49, and 79 percent U&U, 

respectively. The resulting composite U&U percentages, based on the number of customers in 

each rate band, are shown on Attachment 3. Further, the rate base adjustments are shown on 

Schedule 3-C and the depreciation expense and property tax adjustments are shown on Schedule 

4-C. 

E. U&U and Composite U&U for Protested Wastewater Collection 

We do not have a rule that specises how the U&U determination for wastewatex 

collection systems is to be made. As previously discussed, OUT practice is to compare the 

customers (or ERCs) receiving service to the lots with senice available. In addition, a growth 

allowance may also be included in the U&U calculation, pursuant to Section 367.081(2), F.S. 

While AUF and OPC agree on the U&U percentages for 16 of the wastewater collection 

systems, there is disagreement with respect to 11 of the collection systems, including Beecher‘s 

Point, Breeze HiU, Fairways, Holiday Haven, Jungle Den, Peace River, Rosalie Oaks, Siver 

Lake Oaks, Sunny Hills, Village Water, and The Woods. Table 4, blow, contains a summary of 

AUF’s and OPC‘s proposed U&U percentages, along with our approved U&U percentages for 

each of the systems in dispute. Attachment 4 reflects AUF’s and OPC’s U&U positions, as well 

as our approved U&U percentages, for each of the 1 1 wastewater collection systems that were 

not stipulated. 

System AUF U&U% 

Beecher’s Point 100 

B-Hill 100 

Fairways 100 

Table 4 - WW Collection System U&U 

OPC U&U% Comm’n Approved U&U% 

45 100 

94 100 

99 100



PAGE 83 


The overall U&U concepts described by AUF witnesses Rendell, Seidman, and OPC 

witness Woodcock for wastewater collection systems are consistent with their arguments related 

to water didbution systems, WTPs, and WWTPs, as discussed above. AUF relies on regulatory 

certainty resulting hm reliance on previous Commission decisions, while OPC suppo* 

recalculating U&U in each rate case. 

AUF witness Rendell te&ied that AUF is requesting that we recognize the U&U 

amounts determined in OUT PAA decision, relying on the arguments that AUF used the same 

methods that were approved in the last rate case and recognizing that there have been no 

structural or operational changes to the collection systems. 

In Docket No. 080121-WS, tbree of the collection systems in dispute were found to be 

100 percent U&U, including Beecher’s Point, Jungle Den, and Rosalie Oaks. We found the 

Breeze Hill collection system to be 100 percent UBCU in the two prior staff-assisted rate cases. 

According to witness Rendell, OPC participated in those cases and did not appeal those 

decisions. Further, there have been no structural or operational changes to the system since the 

last rate case. According to witness Rendell, the Fairways and Peace River systems are 

completely built out with no possibility of expansion and should also be considered to be 100 

percent U&U. For the remaining five collection systems, including Holiday Haven, Silver Lake 

Oaks, Sunny Hills, The Woods, and Village Water, AUF proposes that we find those systems to 

be 69,87,55,71, and 58 percent U&U, respectively, consistent with our decision in AUF’s last 

rate case. 

OPC witness Woodcock’s testimony for wastewater collection systems parallels the 

testimony he provided for water didbution systems. Consistent with that testimony, witness 

Woodcock recalculated the U&U percentages for each of the disputed collection systems, relying 

on a comparison of lots served to lots with senrice available, for all systems with the exception of 

Jungle Den. For the Jungle Den collection system, witness Woodcock relied on a comparison of 

the number of customers connected with the numk of potential customers, instead of relying on



PAGE 84 

comparing lots served to lots with service available. Because there are a mber of lots in that 

system that have ten customers per lot, witness Woodcock proposed adjusting the number of lots 

available to reflect the number of potential customers. Witness Woodcock supports a U&U 

percentage of 87 percent for Jungle Den to recognize about 20 vacant lots that would likely 

accommodate single family homes. 

c. other J.ntervenors 




As previously discussed, when systems are not experiencing growth, especially when that 

system is an older system, it is likely that a built-out condition exists. Some vacant lots may be 

found in a utility’s service area, but the timing of the addition of customers on those lots is 

diEcult to predict AUF and OPC agreed that none of the collection systems for which the U&U 

pmentage was disputed have had any signiscant growth in the past five years, with the 

exception of V i e Water which experienced about six percent growth over the past five years. 

In addition, as discussed above and as tesiified to by AUF witnesses Rendell and Sei- we 

find we should rely on our prior decisions and that them is a need for regulatory certai~~ty. 

Therefore, the four collection systems in dispute that were found to be. 100 percent U&U in prior 

cases, including Beecher’s Point, Breeze HiU, Jungle Den, and Rosalie Oaks, shall be considered 

to be 100 percent U&U because those systems appea~ to be built out with no apparent potential 

for expansion. In addition, the Fairways and Peace River systems appear to be built out and shall 

also be considered to be 100 percent U&U. 

For the Holiday Haven, Silver Lake Oaks, Sunny Hills, The Woods, and Village Water 

systems, the U&U percentages relied on by AUF fiom Docket No. 080121-WS were stipulated 

amounts. Rather than rely on stipulated percentages *om Docket No. 080121-WS, for these 

systems, we find that AUF’s calculated U&U amounts of 69,87,55,71, and 58 percent shall be 

recognized for Holiday Haven, Silver Lake Oaks, Sunny Hills, The Woods, and Village Water. 

A review of the system maps shows that the customer and lot counts provided by AUF were 

more accurate. 


Based on the above, we hd that all of the AUF collection systems that were not 

previously stipulated shall be considered to be 100 percent U&U, with the exception of five 

systems (Table 4). The five systems shall be considered to be 69, 87, 55, 71, and 58 percent 

U&U for Holiday Haven, Silver Lake Oaks, Sunny Hills, The Woods, and Village Water, 

respectively. Attachment 4 Contains our approved U&U percentages and the resulting composite 

U&U percentages based on the number of customers in each rate band Further, the rate base 

adjustments are shown on Schedule 3-C and the depreciation expense and property tax 

adjustments are shown on Schedule 4-C.

ORDFX NO. PSC-12-0102-FOF-WS 


PAGE 85 

F. Defd Rate Case Exuense 

AUF included $777,577 of Deferred Rate Case Expense (DRCE) in its w o w capital 

allowance. With the jurisdictional factor applied, the Utility reflected a total of $467,713 for its 

rate bands and stand-alone systems in the instant case. This issue is comprised of two 

components. The fkst component is the mortkd balance of rate case expense h m the 2008 

rate case and the second component is the amount of rate case expense approved for this rate 

-proceeding. 

1. Defd Rate case ExDense - 2008 Rate Case 

In Order No. PSC-O9-0385-FOF-WS, we approved a total Rate Case Expense of 

$1,501,609?6 Amortkation went into effect April 1, 2009. Recognizing that rates for the 

current rate case will not go into effect before March 2012, our staff calculated a 13-month 

average balance of $573,172 for the fkst year new rates will be in effect Our practice is to 

include onehalf of rate case expense in working capital?' Therefore, onehalf of the 13-month 

average balance, or $286,586 ($573,172/2), shall be included in the working capital calculation. 

Consistent with the mud amortization amount approved in the Utility's 2008 rate case, and 

ushg one-half of the 13-month average balance for DRCE through March 2012, test year DRCE 

shall be reduced by $181,127 ($467,713 - $286,586), as shown in Table 5 below. 

36 See order No. pscO9-0385-FOF-WS, p. 60. 

''S Orda Nos. PSC-09-0375-PAA-GU, issued May 27,2009, m Docket No. 080366GU, In re: Petition for ratc 

m- bv Florida Public Utilities Comoanv, p. 21; and PsGoo-o248-PAA-WU, issued February 7, 2000, in 

Docket No. 990535-W, In re: Re4uest for aDDIOval of increase m water rates inNassau Counlv bv Florida public 

Utilities Comoanv IF emandjnaBeachSvstem~ pp. 13-14.

ORDER NO. PSC- 12-0 102-FOF-WS 


PAGE 86 

2. Deferred Rate Case Ex~ense -CunentRateCase 

As discussed later in this Order, we calculate total rate case expense for the current case 

to be $1,409,043. To reflect one-half of the total rate case expense, $704,521 ($1,409,043/2) 

shall be included in the working capital calculation. This results in an incmse to DRCE in the 

amount of $704,521, as shown in Table 6 below. 


Consistent with the annual amortization amount approved in the Utility’s 2008 rate case 

and our practice, DRCE shall be increased by $523,395 [($181,127) +$704,521], as shown in 

Table 7 below.



PAGE 87 

G. Working Car, ital Allowance 

The amount of working capital is a W-out issue. In its filing, AUF requested a total 

jllrisdictional Working Capital Allowance of $3,465,229. As addressed in the Stipulations for 

PAA Issues 2, 11, ad 12, Deferred Debits have been incmed by $93,048 and Accrued Taxes 

reduced by $1,153,548. As discussed under Section W. A. M t v of Service, our staff has 

recommended working capital be increased by an incxment of $60,180. As discussed above, we 

have i n d DRCE by $523,395. In addition to these adjustments, we hd that an offsetting 

adjustment is necessary regarding syskrn-speciiic Regulatory Assets. 

In its tiling, the Utility included $380,595 in its MFRs for Regulatory Assets. A 

Regulatory b t typically involves a cost incurred by a regulated utility that would normally be 

expensed currently but for an action by the regulator or legislature to defer the cost as an asset to 

the balance sheet This allows a utility to amortize the Regulatory Asset over a period greater 

than one year. Included in Am's calculation was the 10-year amoMon of $664,192 that 

began on January 1,2006, related to a Regulatory Asset (in lieu of a surcharge) approved in the 

Utility's 2004 transfer docket3* This Regulatory Asset is associated with specijic systems. Our 

staff calculated the 13-month average for each rate band for the test year. Based on the proper 

allocation of Regulatory Assets by system and rate bands, the amount recorded for Wastewater 

Rate Band 2 shall be reduced by $35,272, and the amount recorded for Wastewater Rate Band 3 

shall be increased by the same amount Based on the above, we calculate total jurisdictional 

Working Capital Allowance to be $2,928,122. This represents a net reduction of $537,106 

($93,048 - $1,153,548 + $60,180 + $523,395). 

3' See Order No. PSGo5-1242-PAA-WS, issued December 20, 2005, in Docket No. 040951-WS, lp re : Joint 

amlication for ammd of sale of Florida Water Services C o r n 'on's land, hies. and certilicates in Brevd 

HiehlandsLakc. Oranw Pasw. Pok Putnam. a mition of Seminole. Volusia and Washjn&on counties to Aaua 

Utilities Floride. Inc., pp. 10 and 37.



PAGE 88 

H. Total Rate Base 

Based upon the Utility’s adjusted 13-month average test year balances, the stipulated 

adjustment& and our adjustments above, we calculate the appropriate 13-month average rate base 

to be $20,998,991 for water and $13,960,658 for wastewater. Schedules 3-A and 3-B reflect our 

rate base calculations. Our adjustments to rate base are shown on the 3-C Schedules. 

A. Deferred Tax 

VI. COST OF CAPITAL 

As show on the MFR Schedules, AUF proposed a total balance of $1,456,472 in 

accumulated deferred income taxes (ADITs) in the capital structure. However, the Utility’s 

filing shows that AUF did not include deferred income taxes related to the requested pro forma 

plant additions when the MFRs were originally filed on September 1, 2010. The Utility 

explained that it did not make an adjustment because the impact on the total balance of ADITs 

was expected to be immaterial. The Utility provided a schedule that shows the deferred tax 

effect of the pro forma plant additions as a debit adjustment of $26,813 to ADITs. 

Pursuant to the Small Business Jobs Act of 2010 that was signed into law on September 

27, 2010, a taxpayer is allowed 50 percent bonus depreciation for certain eligible property 

ac@red and placed in service during 2010.9’ For qualified property p l d in service after 

September 8, 2010 and before January 1, 2012, the Tax Relief Unemployment Insurance 

Reauthorization and Job Creation Act of 2010 provides for additional bonus depreciation 

allowance for a total of 100 percent cost recovery in the first year. (JRC Section 168(k)(l) and 

(5)) As shown on the MFR schedules, the balance of ADITs does not include the deferred tax 

effects of bonus depreciation related to plant p l d into seMce between January 1,2010 and 

April 30,2010 or pro fonna plant. The bonus depreciation was not considered because the new 

law was not enacted at the time the Utility filed its MFRS. 

The current law was enacted on September 27, 2010, and, therefore, now constitutes a 

known and measurable change. Therefore, we find that the deferred income taxes related to the 

bonus depreciation allowed under current law in the balance of accumulated deferred income 

taxes shall be included. In addition to the applicable bonus depreciation allowance for qualified 

property, Modified Accelerated Cost Recovery System (MACRS) tax depreciation shall be 

recognized based on applicable convention, as prescribed by IRC Section 168(d).m The net 

effect of the adjustments is a substantial increase in the balance of ADITS and, thus, a decrease to 

the Utility’s overall cost of capital. 

Deferred income taxes related to plant represent deferred tax effects related to the 

difference in book and tax depreciation caused by accelerated tax depreciation. Tax 

normalization provisions of the Internal Revenue Code (JRC) require the Utility to record 

39 Small Business Jobs Act of 2010, Pub. L. No. 11 1-240,§ 2022,124 Stat 2504 (Sqtembm 27,2010). 

m26U.S.C. gl68(d)(2011).



PAGE 89 

deferred income taxes in accordance with ASC 740:l Further, JRC Section 168(i)(9) requks 

consistent application of estimates and projections of tax expense, depreciation expense, and the 

reserve for deferred taxes with respect to rate b e for mtemahg purposes." Per IRC Section 

168(f)(2), the consequence of violating the normalization method of accounting is the loss of the 

ability to utilize accelerated tax methods of depreciati~a43 

The full-year convention was applied to pro forma plant for computation of regulatory 

depreciation for ratemaking purposes. Consistent with the tax normakdon requirements, the 

full amount of deferred income taxes resulting fiom the diEemce in the methods used to 

compute book depreciation expease and the tax depreciation deduction sball be included in the 

balance of deferred income taxes. As discussed above, we are including pro forma plant 

additions of $792,347 in rate base. Consequently, the deferred income taxes generated by the 

allowed plant additions shall be included in the balance of the ADITS. ADITS also were adjusted 

to reflect our approved composite used and usefd percentages in Attachment 2. 

Based on the aforementioned, we find a consolidated adjustment of $662,982 is 

appropriate. Therefore, the appropriate balance of ADITs to include in AUF's capital structure is 

$2,133,903. 

B. Leverage Formula 

This was a Type B Stipulation, whereby AUF and our staff agreed that the appropriate 

leverage formula to use is the leverage formula in effect at the time we make our final decision, 

and the other parties took no position. The current leverage formula was approved in Order No. 

PSC-ll-O287-PAA-WS, issued July 5,201 1,44 and shall be used. 

C. Overall Cost of CaDital 

Based upon the decisions in preceding issues and the proper components, amounts and 

cost rates associated with the capital structure, we jincl the weighted average cost of capital to be 

7.1 8 percent for all systems. 

As discussed above, we had adjustments to the balance of zero cost accumulated deferred 

taxes resulting in deferred taxes of $2,133,903. Also, as noted above, it has been stipulated that 

the leverage formula in effect when we make our final decision will be used in this case. Using 

the current leverage graph, the midpoint for ROE is calculated to be 9.76 percent. However, as 

ruled on earlier, because of marginal quality of service, the ROE shall be redd by 50 basis 

points, and so rates will be set using a 926 percent ROE. This return is based on the application 

of our leverage formula approved in Order No. PSC-11-0287-PAA-WS and an equity ratio of 

'I coditication of Accounting Standards and Procemnes, Statement of Auditing standards No. 109, 6 740 (Fm 

Accounting Standards Bd 1992). 

26 U.S.C. 8 168(i)(9) (201 1). 

O1 26 U.S.C. 5 168(fQ) (2011). 

Docket No. 110006WS, In re: Water andwastewaterindustrv mud reestablishment of authorized ranee of 

retlrm On wmmon emh' for Water and wastewater UueS DursUant to w i ~ 367.081mm. n FS,



PAGE 90 

61.31 percent. For the ROE, we fhd that an allowed range of plus or minus 100 basis points 

(8.76 percent to 10.76 percent) shall be recogniz.ed for ratemaking purposes. 

Based on the proper components, amounts, and cost rates associated with the capital 

stmcture. for the pro fonna test year ended April 30,2010, the appropriate weighted average cost 

of capital for AUF for purposes of setting rates in this proceeding is 7.18 percent, as shown on 

Schedule 1. 

W. NET OPERATING INCOME 

A. Billing Determi~~ts 

The billing deterrmnan . ts list the number of bills rendered and the number of gallons sold 

during the test ear, by customer class and meter size, for each of AUF’s rate bauds and standdone 

systems! The raw data for these schedules originates in AUF’s MFR Schedules E-14, 

which shows the actual numbr of test-year bills for each rate band aud stand-alone system, 

rendered in 1,000-gallon increments by customer class and meter size. The billing data is shown 

in summary form on MFR Schedules E-2.& 

1. Parties’ Armm ents 

e 

AUF witness Szczygiel testified that the billing determinants are. reasonable and 

appropriate because they are based on an accurate aud representative number of bffls, ERG, and 

consumption data for AUF’s water and wastewater systems that are a part of this case. 

OPC witness Dmukes tedied that an adjustment to increase the number of kgals sold 

in the test year is appropriate. The adjustment, totaling 56,722.5 kgals as shown on Schedule 25 

of her testimony, reverses the reduction in test-year consumption experienced in the Scottish 

Higblands area The result of this adjmiment is a test-year revenue imputation (increase) of 

$372,925. The recommended adjustment to kgals originates h m Am’s budget variance 

reports. Witness Dismukes M er testifed that AUF should absorb the revenue impact of 

reduced sales for two reasons: 1) the Utility has more control of the factors that led to the 

reduced coDsumption than customers do, and 2) the Utility’s ROE already includes a risk 

component which should compensate AUF for reduced sales. 

c. other Intervenors 


issue. None of these paaies included any argument on this issue in their respective briefs. 

‘’ A& Utilities Flori& Inc., Minimum F h 

Regu*ements, Schedules E-2 and 514. 

k See Order PScO9-0385-FOF-WS.



PAGE 91 


Under cross-examhtion, witness Dismukes agreed that: 1) ratemah . g is prospective in 

nature, and 2) it is not realistic to expect the Scottish Highlands irrigation well customers to 

return to Am’s system during the first 12 months the new rates will be in effect- Witness 

Dismukes admitted that if we were to set rates using revenue greater than expected to be 

generated fmm rates, regulatory risk would increase. 

StaE witness Stallcup testified that once customers have invested in the installation of 

shallow wells, those customers will not return to AUF for their irrigation demands. These lost 

gallons and their associated revenues represent a permanent reduction in AUF’s sales that should 

not be artificially adjusted back into the test year. Therefore, witness Stallcup believes that: 1) 

witness Dismukes’ adjustment to test year kgals and the associated revenues recommended was 

not reflective of the period when AUF’s new rates will go into effect, 2) the adjustment 

recommended by witness Dismukes would result in rates that would fall short of generating 

Am’s revenue resuirement, and 3) the resulting rates would therefore not be compensatory as 

required by Section 367.081, F.S. Witness Stallcup also believes that if witness Dismukes’ 

adjwlment to kgals is ado* it would likely require an additional risk premium to the 

appropriate ROE to compensate investors for the revenue shortfall. 

On rebuttal, witness Szczygiel testified that witness Dismukes’ recommended adjustment 

to add back lost consumption associated with the irrigation wells in Scottish Highlauds would be 

confiscatory and contrary to long-standing policy. In additioq witness Szczygiel testified that 

drops in consumption due to the installation of irrigation wells is not unique to AUF. Witness 

Szczygiel agreed with the points raised by witness Stallcup regarding witness Dismukes’ 

recommended consumption adjustment. 

We are persuaded by statements and admissions made by witness Dismukes un&r cross- 

e- ’ ‘on, in particular: 1) ratemaking is prospective in nature, and 2) it is not realiic to 

expect the Scottish Highlands inigation well customers to return to AUF’s system during the 

first 12 months the new rates will be in effect- These statements are consistent with the 

testimony of witness Stallcup. Furthermore, we believe (as witness Stallcup stated) that the 

adjustment recommended by witness Dismukes would not only result in rates that would fall 

short of generating Am’s revenue requirement, but that the resulting rates would therefore not 

be compensatory as required by Section 367.081, F.S. Therefore, we find witness Stallcup’s 

arguments are compelling. 

Furthermore, we are also persuaded by OUT relevant prior deciions. We have long dealt 

with the issue of reduced collsumption and the appropriate way to handle the consumption 

reduction on a prospective basis. We note two cases in particular. The first case involved a 

staff-assisted rate case for Sebring Ridge Utilities, Inc., in Highlands County. In our Proposed 

Agency Action order, we stated. 

Based on information received fmm a customer residing in the Bluffs 

condominiums (Bluffs), the Bluffs installed irrigation wells around August, 1995.



PAGE 92 

Therefore, utility consumption will be less for these customers. We have 

estimated a reduction in consumption of 15% and have adjusted test year 

consumption accordingly?7 

Although the above-referenced order was protested, the protest was eventually withdrawn, and a 

subsequent order was issued making the PAA order i%al and effective." 

Another case that speaks to the issue at hand involved a M-assisted case for Bieber 

Enterprises, Inc. d/b/a Breeze Hill Utilities. In that case, we discussed an anticipated 

consumption reduction and how it should be accounted for: 

Since the customer meeting, we have been noMed that 12 additional customers 

have sunk private wells, allowing a total of 16 customers access to those wells to 

provide water for their outdoor needs. The ease of installation of wells, coupled 

with their relatively low cost, presents us with a unique situation h m a 

ratesetting perspective. We must account for the anticipated loss of gallonage 

sales attxibutable to those 16 customers who now have access to new1 sunk wells 

before a rate structure may be designed and the appropriate rates set 4J- 

Although the chmstan ces of each case differ slightly, the common tkead is that, like 

AUF, each utility was faced with consumption reductions arising h m the installation of 

inigation wells. We, by estimahg the consumption reductions before setting rates in each case, 

recognized that 1) the consumption reductions were not transitory in nature, 2) the utilities 

should not absorb the revenue impact of the reduced sales, and 3) the reductions had to be 

accounted for before setting rates. Failure to appropriately account for these consumption 

reductions would have d ted in rates that would not be compensatory as required by Section 

367.081, F.S. Such is the Circumstance in the instaut case. 


Based on the foregoing, the appropriate billing dete- for the test year shall be as 

shorn in AUF'S MFR Schedules E-2 and E-14. 

B. Test Year Revenues 

The appropriate amount of test year revenue is a fall-out calculation using the billing 

determinants in the test year. Based on the approved billing determinauts above, the annualized 

revenue for each system bas been recalculated in order to ensure that there were no calculation 

errors by the Utility. We note. that the Utility used the effective rates of the three different sets of 

rates that were in effect during the test year instead of the rates in effect prior to *the instant 

"Scs order No. PSC96-0869-FOF-WS, issued July 2,1996, in Dock3 No. 950966-WS. In re: AmIiCation for a 

SlaE-asSisted rate case in HiUlllrmd3 comtvbv %bring %&.e Utilities. Inc. 

order No. PSG96-1458-FOF-WS, issued December 2, 1996, in Docket No. 950966-WS, In re: Awlidon 

forastaffassistedrate case inHiehlands Countv bv Sebrine Ridee Utilities k. 

'9~OrderNo.Psco2-II14-PAA-WS.



PAGE 93 

case. Based on the recalculation, we find that the apprOPriate annualized water and wastewater 

revenues are $8,357,510 and $4,908,138, respectively. As a result, water revenue shall be 

reduced by $1 10,012 and wastewater revenue shall be redd by $58,306. 

Our adjustments to Bnnualized test year revenue are as shown in Table 8 below. 

C. Allocation Methodoloav 

1. Parties’ Arguments 

e 

Table 8 - Apppriate Annualized Revenues Adjustments 

1 I Comm’n I 

AUF witness Szczygiel test%& that AAI and its affiliates allocate costs and charges to 

AUF in accordance with the policy set forth in AAI’s Corporate Charges Allocations Manual. 

Witness SzczYgiel asserted that AUF’s affiliate cost allocation policy ensures that costs are 

properly allocated to AUF’s ratepayers. In its brief, the Utility stated no witness has challenged 

Am’s affiliate cost allocation methodology in this case. Specifically, the Utility’s reliance on 

that statement was that OPC witness Dismukes stated that she did not 5nd any problems with the 

mechanical allocation. The Utility also argued that AUF’s affiliate cost allocation methodology 

was previously analyzed, reviewed, and approved by this Commission in Docket No. 080121- 

WS, and there is no evidentiary basis to deviate Eom that precedent 

In his rebuttal testimony, witness Szczygiel agreed that Aqua Georgia should be allocated 

a portion of ASI’s costs based on an imputed customer count of 408 customers which results in



PAGE 94 

an annual duction to AUF of approximately $244. Witness Szczygiel asserted that Suburban 

Environmental Sexvice Company falls under Aqua Resources and has been imputed a customer 

couut of 2,695, and as such, has already received a portion of ASI's costs. 

With regard to Utility & Municipal Services, Inc., witness Szczygiel explained that this 

entity is owned by Aqua PA and receives passive income similar to other forms of passive 

income in many states, such as passive income fium antenna leases. As a result, wilness 

Szczygiel contended that these passive revenues do not have an associated customer count and 

therefore receive no allocation. Witness Szczygiel pointed out that most of the passive revenue 

AAI earns serves to reduce the revenue requirement of the operating company in the applicable 

state. 

With regard to Aqua Operations, witness Szczygiel explained that this is a legal entity 

which holds and administers operation and maintenance contracts in the applicable states. AUF 

witness Szczygiel argued that OPC witness Dismukes acknowledged that there are no charges 

fium AAI, AS1 or ACO for the vast majority of the municipal contracts. Witness Szczygiel 

ssserted that, to the extent any services are provided to non-regulated afhliates, costs are 

allocated h m mates using the sristing &liiate interest agreement and the underlying 

allocation methodology consistent with the 2008 rate case. 

With regard to common officers and directors of regulated and non-regulated afEbks, 

witness Szczygiel testified that the fact that there are common officers should not dictate whether 

or not to allocate officers' salaries. Witness szyzcgiel stated that all legal entities require 

assigned officers and directors. Witness Szczygiel contended thaf in the case of Aqua 

Operations, which covers multi-state non-regulated contracts, the contracts are handled at the 

state level and are generally administered by the state president. 

OPC witness Dismukes testified thaf given that aEliate tmnsacb 'om are not --length 

.. 

dealings, we have an obligation to closely scmtmze cost allocation techniques and methods of 

charging aiTXates to ensure that the Utility's regulated operations are not subsidizing the nonregulated 

operations. Witness Dismukes stated that AAI has nine non-regulated subsidiaries, and 

that AUF has contracted with one of the non-regulated subsidiaries, Aqua Services, Inc. (AS0 to 

provide managerial, Operational, and regulatory support Witness Dismukes argued that AS1 

performs services for certain non-regulated afhliates. However, she noted that AS1 does not 

consistently allocate costs to these affiliates and that there are four affiliates that do not receive 

allocations from ASI. Witness Dismukes pointed out that, in the 2008 rate case, the Utility 

acknowledged the need to allocate costs to at least one of its wn-regulated atFliates. However, 

OPC argued that all non-regulated aEliates should be consistently allocated AS1 costs. 

Moreover, OPC witness Dismukes indicated that the regulated and non-regulated Aqua 

com.panies have common officers and directors and that AAI failed to demonstrate that the 

salaries and benefits of these common officers are allocated to the non-regulated companies. 

Witness Dismukes testified that the failure to allocate common costs to AAI's non-regulated 

operations causes AAI's regulated operations to subsidize the non-regulated operations.



PAGE 95 

Witness Dismukes testified that certain operating companies provide contract operator 

services, but that no common costs are allocatkd for these senrices. While the Utility claims it 

did not allocate costs because no corporate services were provided directly, witness Dismukes 

testified that AUF failed to take into account the inbt costs associated with the additional 

oversight and management of the aiEhtes that provide these services. Witness Dismukes 

testified that the failure to take these additional costs into account and allocate them accordingly 

results in an over-allocation of costs to the regulated companies without similar allocations to the 

nm-regulakd operations. 



issue. None of these parties included any argument on this issue in their respective brief%. 

2. preliminarv Matters 

Before weighing in on the parties’ spcijic arguments, there are tbree areas that should be 

addresd related to the allocation methodology, namely, required analyses of &iate charges, 

our statrs amiatemnsactl ‘om audit, and additional AAI customers. 

a Allocation Methodology 

Staff witness Welch explained that AAI has two divisions that docate costs to the 

individual states. The ht division is AS1 which accumulates and allocates common payroll 

from the AAI Pennsylvania office. AS1 also accumulates invoices that are common to all states. 

Witness Welch explained these costs are al@ in two separate billings to the states, including 

the payroll charged based on timesheet hours wherein those hours are multiplied by a rate which 

includes payroll costs, benefits, taxes, pension costs, and office space costs. Witness Welch 

further explained that the invoices are charged through a sundry allocation which is allocated 

based on number of meters. 

The second division is ACO, which does the customer billing and handles the call center. 

Witness Welch stated that ACO accumulates all of its costs including payroll, office space, and 

various invoices, and allocates these costs to states that use the billing system based on number 

of meters. 

In addition to allocations by AS1 and ACO, AAI allocates certain costs directly to states, 

such as ir~~urance, fleet charges, lock box charges, and health insurauce. AU costs discussed 

above are charged to Am’s headquaxters cost center which are then allocated to its nonregulated 

and regulated systems based on direct labor and on the number of customers. 

(1) Required Analyses of AEiiate Charges 

It is a utility’s burden to prove that its costs are leasonable?O This burden is even greater 

when the transaction is between related parties because: (1) a86liate transactions raise the 

Florida Power Corn. v. Cresse. 413 So. 2d 1187,1191 (Fk 1982).



PAGE 96 

concern of self-dealing where market forces do not necessarily drive prices. and (2) utilities have 

a natural business incentive to shift costs from non-regulated operations to regulated monopoly 

operations since recovery is more certain with captive ratepayers. Accordingly, althod a 

transadon between related parties is not per se unreasonable, related party tmmacb ‘om require 

closer scrutiny. The legislature has recognized the need to scrutinize afliliate transactions by 

specifically granting us access to non-regulated af3iliate records. Specifically, Section 

367.156(1), F.S., states: 

The commission shall continue to have reasonable access to all utility records 

records of afltiliated com~anies. includiw its m t com m y. re earding 

transactions or cost allocations among the utility and such aBXated comuauies, 

and such records necessary to ensure that a utilitv’s rateuav ers do not subsidize 

nonutility activities. Upon request of the utility or any other person, any records 

received by the commission which are shown and found by the Commission to be 

proprietary confidential business information shall be kept confidential and shall 

be exempt h s. 119.07(1). 

(Ehpbasii added). In overturning a prior Commission decision, the Florida Supreme Court 

enunciated the standard which we should use in reviewing affiliate tramacb ‘011s stating, “(w)e 

believe the standard must be whether the transactiom exceed the going market rate or are 

otherwise inherently -.”’I This standard of review will be addressed in detail in Section 

W. D. Affiliate Revenues and Charges. 

(2) Affiliate Transaction Audit 

In reviewing the corporate overhead allocated to AUF, our staff auditors reviewed AAI’s 

Bod of Directors minutes to determine if any changes to future operations would affect the test 

year allocated amounts. The auditors reviewed the alldon methodology used to allocate costs 

from ASI, ACO, AAI, and AUF headq- by recalculating the allocation percentages and 

verifying the number of customers to source documents.” In addition, staff auditors performed 

an aualytical review of AS1 and ACO costs to determine whether selected costs could be. traced 

back to supporting s op documentation. An audit of the gross costs at the parent level was 

performed which included an examination of costs for proper timing, amount, and classification. 

The auditors also examined the costs to determine whether any costs were non-utility related, 

non-recUrring, unreasonable or imprudent Further, the auditors reviewed related party 

transactions for reasonableness by ensuring they were commensurate with arms-length 

tnmsactionS. Finally, selected samples were taken from the ledgers of AS& ACO, and AAI and 

were traced to supporijng documentation. 

Numerous atEliate audit fidngs were made, with the majority resulting in adjustments 

that the Utility and parties stipulated. SpeciscaUy, the total $170,651 stipulated aBlhte- 

adjustment consists of the following: Sundry expense adjustment of $5,586 (AEliate Audit 

Finding 2), Investor Relation Promotions and Sponsorship of Events adjustment of $681 

5’ 

GTE v. Deason, 642 So. 2d 545,548 @la, 1994). 

’’ This was done to ensure that AAI’s regulated operations are not subsidizing its non-regulated operations.



PAGE 97 

(Aftilk& Audit Finding 3), AUF Headquarters Charges adjustment of $53,095 ( m t e Audit 

Finding 4), Administrative and TerminatiodNew Hire Salary Normalization and Pro Forma 

adjustment of $100,087 (AfElkte Audit Fmding 6), and Health Insurance Accd adjustment of 

%11,196(AffiliateAuditFinding7). 

(3) Additional AAI customers 

AUF responded to a staff data request indicating that AAI a cqid 22 water andlor 

wastewater systems totaling 5,894 customers subsequent to the April 30, 2010, test year. In a 

subsequent response, the Utility stated that there was no net incremental increase in overhead 

associated with these acquisitions. AUF witness Szczygiel disagreed with the PAA Order 

adjustments associated with these additional AAI customers because he believed they were 

overstated Specfically, witness Szczygiel asserted that the impact of 6,000 customers would 

have a de minimis impact on AUF. In his latefiled deposition Exhibit 4, witness Szczygiel 

reflected an impact of $5,972 related to these additional customers.) Because Izltemalang ' is 

prospective in nature, we find that an adjustment is appropriate to recognize the net additional 

customers now served by AAI. Accordingly, O&M expenses shall be r e d d by $5,972. 


With the exqtion of no allocation of common officers' and directors' salaries and other 

assoCiated costs to non-regulated entities, we find that AUF witness Szczygiel .sufficiently 

addressed the concern raised by OPC witness Dismukes. However, we find that witness 

Szczygiel's testimony did not provide .sufficient evidence to support no alldon of common 

officers' and directors' salaries and associated costs to non-regulated entities. In so findinp, we 

note that it is our "prerogative to evaluate the testimony of competing experts and aEord 

whatever weight to the conflicting opinions it deems ne~essary."~' 

As stated previously, it is a utility's burden to prove that its costs are rea~onable.'~ Due 

to the lack of .sufficient evidence to support AUF's decision not to allocate common officers' and 

directors' salaries and associated costs to non-regulated entities, we find a reduction to AUF's 

O&M expense is warranted in order to recognize an allocation of common costs to AAI's nonregulated 

entities. Using the percentage of non-regulated revenues to total AAI revenues, AUF's 

customer percentage, and AUF's jurisdictional factor, we find that O m expense shall be 

redd by $23,555. 


As stated previously, AUF witness Szczygiel agreed that Aqua Georgia should be 

allocated a portion of ASI's costs based on an imputed customer count of 408 customers. This 

results in an annual reduction to AUF of approximately $244. Becaw ratemakhg is 

prospective in nature, we 6nd it is appropriate to reduce O&M expense by $5,972 in order to 

reco- the net additional customers now served by AAI. Finally, due. to the lack of suflicient 

&s @lfPower Co. v. FPSC, 453 So. 2d 799,805 @la 1984). 

See Florida Power Corn. v. Cresse, 413So.2d1187,1191(Fla1982).



PAGE 98 

evidence to support AUF’s position that no allocation of common officers’ and directors’ salaries 

and associated costs to non-regulated entities is necessary, we iind a reduction to AUF’s O&M 

expense of $23,555 is warranted in order to recognize an allocation of common costs to AAI’s 

non-regulated entities. Based on the above, we find that O&M expense shall be redd by 

$29,772 ($244 + $5,972 + $23,555). Our calculations are shown in Table 9 set out below. 

D. AftiJiate Revenues and Charees 

In its filing, the. Utility recorded a total interampany expense allocation of $2,418,638 

f?om its parent, AAI. This amount included costs associated with AW non-jurisdictional 

systems in Citrus and Sarasota counties. The amount of jurisdictional inkrampany expense 

requested in this case is $1,468,020. 


AUF witness Szczygiel testiiied that the methodology by which the Utility’s af6liate 

transaction costs are allocated to AUF was closely reviewed and approved by us in Docket No. 

080121-WS. He stated that, since the 2008 rate case, AUF conducted a Florida Market Study 

which shows that its customers bene& by having centralized services provided by atfiliates 

because the allocated costs are less than what it would incur if AUF secured the. services hm 

outside sources. In support of his position on affiliate transactions, witness Szczygiel provided 

AAI’s Corporate Charges Allocation Manual and an analysis that he argued demonstrates that 

the allocated costs to AUF by aflilktes are below market costs. AUF witness Szczygiel asserted



PAGE 99 

that OPC's recommended adjamts are confiscatory and represent a duction of over $1.2 

million in aBliate expenses that we approved in the 2008 rate case. 

OPC witness Dismukes testified that afliliate costs have increased significantly since the 

2008 rate case and the Utility has failed to explain these increases. Witness Dismukes stated that 

it is important to closely examine affiliste 'om because they do not qresent arms-length 

dealings and regulated operations should not subsidize the non-regulated operations. She 

asserted that Contractual Services - Management Fees increased by 28 1 percent since the 2008 

rate case, signiscantly more than the reduction to miscellaneous expenses. In its briec OPC 

pointed out that the Utility's O&M expense ratio is over 50 percent compared to AAI's O m 

expense ratio of 38 percent Based on her peer group analysis, wibess Dismukes recommended 

that AUF's expenses related to aBliates should be reduced by $664,023 for water and $312,822 

for wastewater because AUF has not demonstrated any economies of scale or other 

c o r n e benefits to customers. 

c. Other Intewenoe 




In this issue, OPC and the other Intervenors recommend a reduction of $664,023 for 

water and $312,822 for wastewater. OPC argued that the reduction is appropriate because AUF 

has not demonstrated any economies of scale or other commensvate benefits to customers. 

In evaluating whether and how much affiliate costs should be included in rates, we are 

aware of the relevant statutes and cases on rates and aEliate transactiom. Section 

367.081(2)(a)l., F.S., sets forth our responsibility in rate setting, and spec%dy states: 

The commission shall, either upon request or upon its own motion, fix rates which 

are just, reasonable, compensatory, and not unfairly discriminat0 ry. In every such 

promding, the commission shall consider the value and quality of the service and 

the cost of providing the service, which shall include, but not be limited to, debt 

interest; the requirements of the utility for working capital, maintenauce, 

depreciion, tax, and operating expenses incurred in the operation of all properly 

used and usem in the pubric service; and a fair return on the invesfment of the 

utility in property used and useful in the public service. . . . 

As reflected in the statute cited above, we are required to set reasonable rates, but we 

must also set rates that are compensatory. The provisions in the statute require that we consider 

the cost of providing service, which includes operating expenses incd in the opedon of all 

property used and useful in the public service, as well as a fair return on the investment of the 

Utility in properly used and useful in the public service. In conducting our analysis of the



PAGE 100 

appropriate operating expenses to be included, we are mindful of two Florida Supreme Court 

cases. In the case of Kevstone Water Co v. Bevis, 278 So. 2d 606 (Fla 1973), the Court held 

that a utility is entitled to a fair rate of return on property used or useful in public service. In 

Keystone, the Court further found that rates wbich do not yield a fair rate of return are Unjust, 

umeasooable, and confiscatory and thek enfoment deprives a utility of due process?' 

Additionally, in GTE v. Deason, 642 So. 2d 545 (Fla. 1994), the Florida Supreme Court laid out 

the standard of review for atlihte transactions, stating: 

The mere fact that a utility is doing business with an affiliate does not mean that 

unfair or excess profits are being generated, without more. Charles F. Phillips, 

Jr., The Regulation of Public Utilities 254-55 (1988). We believe the standard 

must be whether the transa& 'om exceed the going market rate or are otherwise 

inherently unfair. . . . If the auswer is "no," then the PSC may not reject the 

utility's position. 

GTE v. Deason, 645 So. 2d at 547-548. We have reviewed the record evidence and applied the 

holdings in Kevstone v. Bevis and GTE v. Deason as appropriate. 

a Benefit to RateDav ers from AEhte-Provided Services 

OPC challenged the amount of benefit ratepayers receive from af6Mqrovided services 

and recommended that Am's revenue requirement be reduced by $664,023 for water and 

$312,822 for wastewater. OPC's challenge is multi-ftmted Fmt, OPC challenges AUF's 

evidentiary support using a market-based study to support its aEliate transactions. Sewnd, OPC 

provides a peer group comparison to support its position that AUF's revenue requirement be 

redd Third, OPC challenges AUF's claim that being part of a large organization in which 

management, operations, and regulatory support provided by the Utility's parent and sister 

companies reduces costs to customers. We wiU address the paaies' arguments under two 

separate headings below. The Evidentiary Support for the Afliliate Services subsection 

addresses both Am's market-based study and OPC's peer group analysis. In the subsection 

Cost of Operating Am's Systems, we review OPC's argument that it is the parent organization's 

costs that are increasing Florida ratepayers costs without giving any benefit to Florida ratepayers. 

(1) Evidentiary Support for ABZate Services 

As noted above, the standard to use in evaluating aEhk transactions is whether the cost 

ofthose transactions exceeds the going market rate or is otherwise inherently unfair?' We 

further note that it is a utility's burden to prove that its costs are reas~nable?~ This burden is 

even greater when the transaction is between related parties for two reasons: (1) mate 

transactionS raise the concern of self-deaJjng where market forces do not necessarily drive prices, 

and (2) utilities have a natural business incentive to ShiA costs h m non-regulated operations to 

regulated monopoly operations since recovery is more certain with captive ratepayers. Although 

See Kewone Water CO. v. Bevis, 278 So. 2d 606, €49 (Fla. 1973). 

56E GTE Florida Inc. v. 641 so. ?.a 545 (Fla. 1994). 

'7~FloridaPowerCom.?~,413 - %.Zd 1187,1191 @'La 1982).



PAGE 101 

a transaction between related parties is not per se unreasonable, related party tmmact~ 'om require 

closer scrutiny. To address the benefit to customers h m afltiliate-provided services, we &d it is 

appropriate to address AUF witness Szczygiel's market-based srudy and the peer group 

comparison offered by OPC witness Dismukes. 

(a) Szczygiel's Market-Based Study 

For purposes of its review of AUF's affiliate transactl 'om, our staff requested that the 

Utility provide any and all documents in its possession, custody or control that demonstrate 

whether charges from all affiliates axe provided to AUF at the lower of cost or market In its 

response, AUF provided a recent study prepared by the Utility's sister company, Aqua Virginia, 

which was submitted to the V i a public Service Commission. This study compared the fullyloaded 

hourly rates, including all benefits and applicable taxes, of AS1 employees with the 

hourly rates charged by engineering, accounting, and other consultants h m the private sector. 

According to that study, the hourly rates of AS1 employees were lower than consultants h m the 

private sector. 

In its supplemental response, AUF provided a similar analysis comparing the hourly rates 

of AS1 employees to hourly rates of private sector consultants in Florib Witness Szczygiel 

argued that the Florida-specific analysis revealed that the hourly rates of AS1 employees were 

lower than consultants h m the private sector. The Utility Mer stated that AS1 is a service 

company formed by AAI to pmvide ceniralizd management, accounting, engine, human 

resources, information technology support, legal, and rate case support to AAl's operating 

subsidiaries. AUF asserted that AS1 allows all of its operating subsidiaries to take advantage of 

the economies of scale provided by common ownership of nwnerous companies. For example, 

the Utility contended that afJiliated companies like AUF can share accounting software, asset 

software, and billing and customer information software, thus saving the individual companies 

h m the cost of acsuiring such software on their own. 

If operated as a stauddone company, AUF asserted it would have to hire and retain 

additional employees andlor outside contractors to provide the many services now being 

provided by ASI. For example, the Utility stated that AS1 offers a centraked staff of 

professional engineers to AUF and other AAI operating subsidiaries. The Utility indicated that 

these professional enginem provide services such as obtaining and preparkg requests for 

proposals and evaluating submitted proposals from various engkering fums and are available to 

AUF as needed. AUF contended that the cost of sharing the expense of an engineering staff is 

far less than contracting outside engineering iirms, which not only bill to cover the fully loaded 

cost of their engineering staff, but also to include a profit mar@ The Utility stated that the 

average hourly cost of engineering services allocated to AUF hm ASI, including overhead, is 

approximately $82 an hour. AUF asserted that two Florida engineering firms were surveyed for 

their billing rates, and the rates ranged fiom $1 10 per hour for entry level professiond staff to 

$140 per hour for principals. Based on these billing rates, AUF calculated tbat the per hour cost 

savings ranges from approximately 25 to 41 percent by Using ASI.



PAGE 102 

Likewise, if operated as a stand-alone company, AUF asserted it would have to hire an 

attorney or attorneys, or contract out legal services to outside law firms, for recUning general 

matters. As a subsidiary of AAI, AUF stated it can access legal seMces from the legal staff at 

ASL The average 2009 billing rate for Florida law fhm, as published in the "2010 Economics 

& Law Office Management Survey" conducted by the Florida Bar, was approximately $247 an 

hour?' The Utility stated that the hourly rate, including overhead, for legal services in the test 

year charged to AUF by AS1 was approximately $140 an hour, which represents a savings of 

approximately 43 percent compared to the. Florida Bar average rate. 

AUF also contended it has ~ccess to a full accoUnting &at AS1 with experience in all 

phases of awomting, including muuts payable, property, tax, geneml ledger, payroll, 

purchasing, and accounts receivable. The Utility stated that the average hourly rate billed from 

AS1 was approximately $57 an hour. AUF stated that the "2008 PCPS/TSCPA National MAP 

Survey" conducted by the American Institute of Certified Public Accountants showed national 

average rates for accoUnting professionals. The Utility asserted that these hourly rates, adjusted 

for inflation, are Directors - $161, Mauagers - $137, Senior Associates - $110, ad Associates - 

$88. AUF contended that the average rate charged by ASI, which includes all levels of 

personnel, is approximately 35 percent less at the low end and 65 percent less at the high end 

when mmpared to the national averages. 

AUF further asserted that as a subsidiary of AAI, it has access to a full range of 

management professionals. The Utility contended that some, but not all, of the services provided 

by AAI professionals include human resources, information processing, investor relations, 

financial planning, internal audit, regulatory affairs, and corporate governauce. AUF staied that 

the "Operating Ratios for Management Consulting Firms, 2007 Edition" survey conducted by the 

Association of Mauagement Consulting Firms shows the rauge of billing rates of management 

consultants in the US. The Utility asserted that those rates, adjusted for inflation, are $115 an 

hour for an entry level consultant at a small firm to $468 per hour for the highest level consultant 

at a large firm. AUF contended that the average hourly rate charged by AS1 for the test year was 

approximately $128, which is approximately 73 percent less than the high end of the national 

average. 

As for customer service provided by ACO, the Utili@ contended that AAI had total 

customer service charges of $15,485,729 during the test year in this rate case. AUF stated that 

AAI's total cost of $15,485,729 translates to aper customer cost of $18.12 per year. The Utility 

Percentme HourlvRate 

13%. 

27% 

14% 300 42 

2% 325 

- 14% 350 

.EQ% 

7 

9 

llation of the average $247 hourly rate.



PAGE 103 

asserted that the “Bencbking Pe16ormance Indicators for Water and Wastewater Utilities: 

2007 Annual Survey Data and Analyses Report” released by the American Water Works 

Association listed an average customer service cost per account, adjusted for inflation, of 

approximately $44, which is more than double the AAI per customer Service charge. AUF 

concluded that the per hour costs for seMces and costs per customer confirm that operating AUF 

as an Sate of AAI is beneficial to Florida customers. 

In its brief, OPC argued that AUF’s market analysis had numerous shortcomings such 

that it should not be used in suppoa of AUF’s position that its Sate costs do not exceed 

market rates. OPC witness Dismukes expressed numerous con- with Am’s Florida Market 

Based Study, such as: (1) the study did not consider Services provided by AS1 to the other 

entities included in the Utility’s study; (2) the Utility used only two firms to compare its 

engineering costs; (3) AUF’s comparison appeared to assume that every hour spent by AS1 

pnnel could be billed at a rate comparable to a skilled lawyer, consultant, certiiied public 

accountant or professional engineer regardless of the level of expertise of the AS1 employee; (4) 

the comparison failed to consider that companies typically use outside counsel or consultants for 

specialized areas of law or professional services, not the day-today operations of a business; and 

(5) AUF’s comparison failed to consider that outsourcing of this magnitude would likely be 

hwned upon by regulators due to the high costs that would be passed to ratepayers. 

In response to OPC witness Dismukes’ concerns that the initial study only included two 

engineering firms, AUF witness Szczygiel testified that AUF added two more engineexkg finns 

for a total of four engineering firms to update the Utility’s Market Based Study. In addition, 

witness Szczygiel stated he revised the study to exclude all AS1 employees that hold less than a 

Bachelors’ degree in the categories of amuntauts and management professionals to address 

witness Dismukes’ concern that the level of expertise of AS1 employees relative to third party 

certified public accountants and skilled mnsdtants. 

(b) Peer Group Comparison Offered by OPC witness Dismukes 

In conkst to AUF’s market based study approach, OPC witness Dismukes developed a 

peer group of Commission-regulated utilities to compare their expenses with AUF’s expenses in 

an effort to test the reasonabkness of &ate-provided services. Specifically, this peer pup c o M of 15 Class B utilities and 29 Class C utilities. Witness Dismukes pointed out that her 

peer group consisted of only Class B and Class C utilities because AUF’s systems included in 

this rate case would all be considered Class B or Class C utilities on a stand-alone basis. When 

developing the Class B/Class C peer group, she weighted the Class B and C utilities’ data in 

proportion to the revenue of the systems in each rate band For the individual systems, wituess 

Dismukes matched each system’s Class ranking to the Class comparison. For example, she 

considered Breeze Hil a Class C utility on a stand-alone basis, thafore, its affiliate charges 

were compared only to Cl& C utilities. Witness Dmukes’ peer group only compared 

administrative and general expenses, which consist of salaries and wages for employees and 

05cers, contractual services expenses, and miscellaneous expenses. Based on the total for all 

rate bands and stand-alone systems, under the peer group approach, OPC witness Dismukes



PAGE 104 

testified that the administrative and general expenses should be reduced by $664,023 for water 

and $312,822 for wa~tewater?~ 

AUF witness Szczygiel disagreed with making financial adjustments to any business 

entity using a peer pup comparison like the one developed by OPC witness Dismukes. He 

explained that the som data relied on by OPC witness Dismukes does not permit an apples-to- 

apples comparison with AUF. Witness Szczygiel contended that the Varying levels of services 

provided by the service companies to their individual sffiliates, the different allocation 

methodologies, and the lack of detail in the data submitted prevented a clear d- . ‘onofthe 

amount of costs charged or the prudency of those charges. Witness Szczygiel stated that there is 

no indication that witness Dismukes has audited the source documents of the utilities in her peer 

pup, nor is there any indication that she has a baseline understanding of the condition of their 

facilities. He also asserted that there is no showing of whether the utilities in witness Dismukes’ 

peer p up are in need of rate relief, whether they are operating at a loss, or whether they have a 

service company. Moreover, witness Szczygiel testified that the corporate structures, expenses, 

operating standards, and environmental compliance records of the utilities in witness Dmukes’ 

peer pup are not considered. 

(c) Commission AnaIysis of Two Studies 

While we agree with OPC witness Dismukes that AUF’s Market Based Study does not 

offer a realistic comparison of market based rates, we also agree with AUF witness SzyZgiel that 

the peer group analysis presented by witness Dismukes does not provide an adequate 

comparison. We note that in AUF’s 2008 rate case we also disagreed with witness Dismukes’ 

pvious recommendation to use a comparison of Commission-regulated utilities to AUF in 

evaluating affiliate-provided services. In the Utility’s 2008 rate case, we specifically found 

“[tlhat the comparison analysis proposed by witness Dismukes does not provide an appropriate 

basis to warrant an adjustment being made.”w As acknowledged by witness Dismukes, there are 

complexities associated with detemhiug the reasonableness of affiliate tio om. To that 

point, we iind that witness Dismukes’ peer group comparison does not adequately compare the 

duties, activities, and responsibilities for the Utility’s affiliate-provided services. 

Ifwe were to approve OPC‘s proposed adjustment of $976,845 ($664,023 + $3 12,822), it 

would represent a disallowance of approximately 67 percent6’ of AUF’s proposed allocated 

overhead We are concerned with removing such a signiscant poxtion of costs unless there is a 

dcient evidentiq record to support the removal of those costs. Thus, we find an evaluation 

of the justified costs to operate the Utility’s systems, which is discussed in detail below, is 

necessary to resolve this issue. 

‘9 Wi the approved OM expense adjustments in other issues and any 0th- adjustments to m- 

provided services. we note thaf OPC‘s proposed adjustment in this issue would result in the approval of total O M 

expense thaf is a~~roximtely six percent less than the total O M expense approved m the Utility‘s 2008 rate case. 

* &e OrdcrNo.~PSG09-03SS-FOF-WS, p. 78. 

“% Dercmtaee is calculated bv wine the mwsed adiient of $976.845 divided by total mtercompany



PAGE 105 

(2) Cost of Operating AUF’s Systems 

OPC challenged Am’s claim tbat being part of a large organization in which 

mauagement, operations, and regulatory support provided by the Utility’s parent and sister 

companies reduces costs to customers. Based on its dew of O&M expense for Class C 

utilities, OPC stated that the layers of management associated with the Utility’s allocated 

overhead has not proauced any cost savings for customers. OPC contended that Am’s 

operating expenses are too high when compared to other Class C utilities. 

To test OPC’s assertion, our staffperformed an analysis that compared the long-term debt 

cost of the utilities in OPC witness Dismukes’ peer group which had long-term debt to AUF’s 

cost rate for long-term debt provided by AAI. The following table depicts the calculation of a 

weighted cost of long-term debt for all the utilities in OPC witness Dismukes’ peer pup that 

had long-term debt at the time tbis Commission last established those utilities’ ROES. 

62 

See Order No. 25347, p. 24, issued November 14, 1991, in Docket No. 910093-WS, In rz Reauesl for rate 

,in- in Sumter Countv bv Continental Uiilitv. Inc. 

See Order NoSSG96-1229-FOF-WS, p. 38, issued Septembm 30, 1996, in Docket No. 950828-WS, EUE 

A~~licatim for rate increase in Marion Countv bv Rainbow SDMB Utilities, L.C. 

64 

See Order No. PSC-ll-O385-PAA-WS, p. 27, issued scptemba 13, 2011, in Docket No. 100127-WS, bug 

Auulication fa inme in water and wdstnva ter rates in Marion County bv Tmdewinds Utilities. Inc. 

65 

Order No. PSC-964790-FOF-W, p. 37, issued June 18, 1996, in Docket No. 930892-WU, Jjus 

LaFortune and Otis Fonder for E stafbsisted rate case in Parco County. 

61 See Order No. PSC-96-1466-FOF-W. D. 8. issued December 3. 1996. in Docket No. 960133-W. In re: 

- .- 

ALIDkdOJl for Staff-aSSisted rate case id Ah 

’County bv MHC-GAnZa Fhanche Limaed P&&D dm/a 

Bncumecr Wakr Service. 

611 

Sa Order No. 21919, p. 16, issued September 19, 1989, in Docket No. 890170-W, In re: Auulication of 

cremidoc utiljw Comoration for StaE-assisted rate case in Pasco Comty. 

See Order No. PSGO9-0618-PAA-WS. ._ D. 25. issued Smtemba 11. 2009. in Docket No. 080709-WS, .~ LE 

~~Xcatim for staffassisted rate case in =&is c~untv bv am on umes:Inc. 

m 

See Order No. PSC49-0716-PAA-W, p. 33, issued October 28, 2009, in Docket No. 090072-W, EUE 

ALIDlication for stafi-assisted rate case in Polk COULIIV bv Keen Sales. Rentals and Utilities, Inc.



PAGE 106 

Notes Fqable KRS Lend Dev. 

~~d protection svstems of Pine Island (conti 

Notes Payable KRS Resort 

Notes Payable Cheery Builders 

Line of Credit-SmTnrst 

Wachovia Bank 

Loan3 

Based on the table above, the weighted average cost rate for long-term debt of the utilities 

in OPC witness Disnukes' peer group is 8.88 percent As approved earlier, the Utility's cost 

rate for debt is 5.10 percent Therefore, Am's cost of debt is 378 basis points less than the 

calculated weighted average cost of debt for the utilities in OPC witness Dimukes peer pup. 

"See orderNo. PSC03-074Ll-PAA-WS. p. 58, issued June 23,2003, in DocketNo. 021067-WS, In re: Amtidon 

3 

em .C. 

R See ordm NO. PSG96-0062-FOF-WS. p. 8, issued Jarmary 12, 1996, in Docket NO. 9406.53-WS, U 

1tication for . r s-ces in w e co~n .-t.a meLake 

utilities. Inc. 

& OrdQ. NO. PSC-ll-O345-PAA-WS, p. 35, issued August 16, 2011, in Docket NO. 100359-WS, U 

A berCreekUtilities In A 

" & order NO. PSC-O3-1119-PAA-SU, p. 58, issued oaober 7, 2003, in Docket NO. 030106-SU, U 

ADDlieation for staffgsssted rate case m Lee COW bvEnvinmmenralon Svstans ofPmeIslau d. Inc. 

75 

& orda NO. PSC-OZd487-PAA-SU, p. 44, issued April 8, 2oM, in Docket NO. 010919-SU, In IC AmlicatiOn 

for sraff-askted rate case in Marion Comty by BFF Com. 

- See Order No. PSGo9-0628-PAA-SU, p. 21, issued Septemba 17, 2009, m Docket No. 080668-SU, b 

b Fairmomt U . ' . Them Inc. b 

See OrderNo. PSC-96-0869-FOF-WS, p.10. 

TI -



PAGE 107 

Using AUF's cost structure, this incremental difference in the cost of debt would equate to 

approximately $600,000 in additional revenue requirement. Based on this analysis, it appears 

that AUF customers are benefitting from the Utility's association with AAI though a lower cost 

of long-term debt. 

Moreover, just because the costs to operate a utility are high, this does not necessarily 

mean that a utility is operating inefficiwtly. Other factors may inftuence the costs to provide 

service to customers. '&erefore, we believe a review of this particular Utility's history is helpful 

in- . the costs associated with providing service. AUF aquired the majority of its 

system h m Florida Water Services Corporation (FWSC). FWSC was formerly horn as 

Southern States Utilities, Jnc. (SSU). SSU rates were last established in 1996?8 At that the, 

SSU provided water and wastewater service to approximately 102,500 water and 43,000 

wastewater customers. In SSU's last rate case, this Commission approved a capband rate 

structure that was aflirmed later by the First DCkn The capband rate structure approved in 

Docket No. 950495-WS combined 95 water system and 43 wastewater systems into eight rate 

groups for the water systems and six rate groups for the wastewater systems. Each of these 

groups consisted of systems with similar costs, but cross subsidies did exist witbin each gcoup. 

When the groups were hgmented after the break up of FWSC, the loss of subsidy resulted in the 

remaining systems failing to produce revenues that covered their costs on a stand-alone basis. 

Before these numerous smaller, higherast water and wastewater system were acquired 

by AUF, several of SSU's larger, lowerast systems were sold to municipalities and 

governmental entities. Under the approved capband rate structure, SSU had very large water and 

wastewater systems that were subsidizing numerous smaller water and wastewater systems.8' As 

a result, SSU's rates for the smaller, higher-cost systems were considerably lower than if the 

smaller systems had to pay their true cost of service. AUF purchased the collection of smaller, 

higherd systems witho& the benefit of the larger systems that previously subsidized the 

higherast systems. Without the benefit of subsidization by larger systems, there is an upward 

pressure on rates for these d e r systems. This becomes evident when a com-n is made of 

a small system, Beecher's Point. Taking data from Am's 2008 rate case, the stand-done cost to 

serve a residential customer of Beecher's Point, based on a gallonage cap of 6,000, results in a 

monthly bill of $384. Our capband rate structure approved in the 2008 case resulted in a 

monthly bill of $82. 

b. Adiustments to Af€iliate Costs 

(1) Executive Salary Increases 

AUF included AAI Executive Salaries for its four top exdves of $72,166 as part of its 

MFRs. This represents an increase of 22 percent over the amount approved in the 2008 rate case 

"See Order No. PSC96-1320-FOF-WS. 

"see South States Utilities. &a Florida Water Services Cornration v. Ha public Service Commissiun 714 

So% 1046 1st DCA 1998). 

Io In 1996, SSU's four largest water systems served approximately 47,000 customers, which is more than double the 

present total number of AUF water customers.

ORDERNO. PSC-124102-FOF-WS . 


PAGE 108 

for this line item. We hnd AUF did not provide SUfFcient recod evidence to support an increase 

of 22 percent, particularly in light of the economic downturn. 

Exhibit 197 includes an article from the April 2011 issue of Electricity J o d titled 

%ecovew of Executive C o m m -on Exmnse s in Utilitv Rate Cases.” As explained by the 

authors of this article, due to the recent economic downturn, thm is greater Scrutiny of executive 

pay across the country, including within the utility sector. As finther explained in this article, 

utilities seeking recovery of executive cornpeasation should explain the significant variances in 

year-over-year executive pay. In its proxy statement, AAI reflected a table of the various types 

of CompenSarion for its top five officers from 2008 to 2010.8’ Based on a review of AAI’s pxy statement and the record in this case, we find that AAI has not adequately explained the 

significant year-over-year salary increases for AAI’s top five executives or how these significant 

increases are related to Florida utility operations. 

Based on the evidence presented by witnesses at the technical and service hearings, it 

appears the economic downturn is still beiug felt in Florida. There was a significant amount of 

testimony provided at numerous service hearings r eghg the impact the depressed economy 

has had on AUF customers. In addition, Pasm County wilness Mariano stated that citizens in his 

county are experiencing economic struggles. OPC witnesses Woodcock and Vandiver also 

tedied regarding the diiEcult economic conditions in the State of Florida. Moreover, AUF 

witness Szczygiel acknowledged that the state of the economy may be a driver impacting the 

Utility’s level of bad debt expense. 

Given the state of the economy and the failure of AUF to adequately support its request 

for a 22-percent increase for AAI’s top executives, we find that the incremental salary increases 

for AAI’s top executives requested in this case sball not be passed on to ratepayers. In further 

support ofthis finding, we note the following finding h m a recent rate case? 

In its filing, LUSI made two adjustments to the salaries and wages expense for the 

current test year. The first adjustment annualized the salaries and wages expense, 

and the second adjustment was a pro forma increase for salary increases of 3.5 

percent in April 2011. Given the tumultuous sfate of the economy. we hnd that 

any pay increase at this time shall not be borne by the rateuayers. As such, we 

find that the Utility’s annudimtion adjustment and pro forma pay innease shall 

be disallowed. 

(Emphasis added)83 This PAA Order was made final by Consummating Order No. PSC-11- 

054&CO-WS, k ~~ed November 29,2011. 

~lthougl~ AUF only so+ recovery of the costs associated four of its top executives, the AAI pmxy statement 

refers to five top execmives. 

Sce Order NO. PSC-I 14514-PAA-WS, pp. 20-21, issued Nov& 2,2011, in Docket NO. 10@426-WS, hI% 

A~&xtion for increase in water and wastewam rates in Lake Couniv bv Lake Utilit, Services Inc. 

83 

lhisPAAorder~made6nalbycOnsUmmatingOrderNo. PSC-114548CO-WS, issuedNovember29,2011.



PAGE 109 

We recognize there have been two recent Commission decisions where a 3-percent dary 

increase was granted However, we note that in those instances the utility’s last rate case was 

several years ago or it was the utility’s ht rate case.84 We further note that Am’s 

circumstances are distinguishable fhm these cases in that the Utility’s last rate w e was less 

than three years ago. Accomy, O&M expense shall be reduced by $17,457 to move the 

amount associated with executive salary increases. This amount represents the jurisdictional 

portion of the requested 22 percent saiary increase for the top executives. 

(2) Normalization and Pro Forma Adjustments for AS1 and ACO 

In its fig, AUF requested a 2.9 percent salary increase in its nofmalization and pro 

forma adjustments for Contractual Services - Management Fees. This request relates to 

allocated costs ftom ASI. The Utility also requested a 2.9 percent salary increase in its 

normalization and pro forma adjustments for Contractual Services - Other. This request relates 

to allocated costs fhm ACO. Based on lack of support documentation, we h d AUF has Wed 

to justify its 2.9-percent normalization and pro fonna salary increases. Thmfore, we have 

moved the reque-sted incremental amount above this level associated with the requested 

normalization and pro forma adjustments. This results in a reduction to O&M expense of 

$37,482. 

(3) Indexing of AflYiate Costs 

In gen@ we agree with OPC witness Disnukes that ’ve and geneml 

expenses of the Utility should be explored to determine the reasonableness of AUF’s allocated 

affiliate costs for all the rate bands in order to make an apples-to-apples comparison. Witness 

Dismukes dehed administrative and general expenses as salary and wages for employees and 

officers, Contractual Services - Accounting, Contractual Services - Management Fees, 

Contractual Services - Other, and miscellaneous expenses. Further, ad . . ’ & ‘ve and general 

expenses should also include pensions and benefits, Conkactual Services - Engineering, 

Conhctual Services - Leg4 and Contractual Services - Testing. 

OPC witness Dismukes asserted that Contractual Services - Management Fees increased 

by 281 percent since the 2008 rate case, significantly more than the reduction seen in 

miscellanmus expenses due to the shifting of costs as alleged by AUF. AUF witness Szczygiel 

stated that OPC witness Dismukes ov& the change in AUF affiliate costs because the 

Utility now records all In-State A- ‘ve Costs, which are not affiliate costs, in Contractual 

Services - Management Fees, Account Nos. 634 and 734, for water and wastewater, 

respectively. Witness Szczygiel testified that the Utility recorded $2,164,049 as miscellaneous 

expenses in the 2008 rate case and $2,116,558 as Contractual Services -Management Fees in the 

test year for the instant case. This represents a decrease of $47,491 ($2,164,049 - $2,116,558), 

which witness Szzygiel stated was not protested by any party. Witness Szczygiel also testified 

See Order No. PSC-11-0010-SGWU, pp. 3, 20-21, issued Jrmuary 3, 2011, in Docket No. 1001WWU, 

Azcation for increase in water rates in Franklin Countv bv Water Manae ement Services, Inc. (Although this Final 

order was appealed to the First District court of Appeals, OUT decision for the granting of a 3 - 7 t increase WBS 

not a pmt of Water Msnagement Services, Inc.’s appeal. also ordtr No. PSC-I 1-0385-PAA-WS, p. 9.



PAGE 1 10 

that AUF recorded $1,7.98,024 of total aEliate expenses in the 2008 rate case and $1,293,040 in 

the test year for the instant case. This represents a decrease of $4,984 ($1,298,024 - $1,293,040). 

Witness Szczygiel acknowledged that this issue was protested 

We are unable to reconcile AUF witness Szczygiel’s reclassification from miscellaneous 

expenses to Contractual Services - Management Fees contained in Exhibit 208 with the Utility’s 

MFRs. Firsf using the jurisdictional factor of 60.17 percent for the bands and systems included 

in the instani case, we calc- the In-State Administrative Costs reclassified to Contractual 

Services - Management Fees to be approximately $1,273,532 ($2,116,558 x .6017). However, 

according to the Utility’s MFRs, the reduction in total miscellanwus expenses was only 

$167,975. We realize that there would be direct charges of miscellaneous expenses for each 

regulated and non-regulated rate band and system, but we could not find in the record any direct 

charges that would explain the significant difference between the calculated amount of 

$1,273,532 and the $167,975 amount reflected in the Utility’s MFRs. Given the Utility’s failure 

to reconcile this major reclassification with the actual decrease in miscellaneous expenses h m 

Am’s 2008 rate case, we find it is appropriate to examine the changes in Contractual Services - 

Management Fees and Contractual Services - Other where AS1 and ACO allocated costs are 

recorded, as well as miscellaneous expenses. Based on a review of AUF’s filing, it appears that 

the Utility’s requested Contractual Services - Management Fees, Contractual Services - Other, 

and miscellaneous expenses combmed have increased by approximately $1.25 million, or 69 

percent over the combined amount of Contractual Services - Management Fees, Contractual 

Services - Other, and miscellaneous expenses approved in AUF’s 2008 rate case. 

Having previously found that both the AUF market-study approach and the OPC peer 

group comparison fail to adequately support the positions of the respective parties, we turn to an 

alternative approach in evaluating the &ate costs. We have indexed the costs using ou 

approved price indices that were established pursuant to Section 367.081(4)(a), F.S. Using the 

resulting amounts from all the other expense adjustments for the above noted administrative and 

general expenses, the total cost per customer is approximately $210. Utilizing the approved 

price indices from 2008 through 2011, and taking into account the actual decline in the total 

number of customers of AUF since its 2008 rate case, we calculated an index factor of 

approximately 5.93 percent. Applying the index factor of 1.0593 to the approved amounts h m 

the 2008 rate case for the above-noted administrative and general expenses, we calculate a total 

cost per customer of approximately $200. This represents a difference of approximately $10 per 

customer. Applying this $10 difference to the total number of customers of the existing eight 

rate bands, we find that O&M expense shall be reduced by $227,762.85 In support of this 

approach we note that there are two similar, recent Commission decisions. In each of those 

decisions, the utility failed to meet its burden of proof for requested salaries increases, and we 

indexed their salaries using the same methodology.86 

Based on this total adjustment of $227,762 results in the approval of total O&M expense that is approximately 

three percent greater than the total O M expense approved in me Utilay‘s 2008 rate case. 

86 

See Order Nos. PSC-104423-PAA-WS, pp. 13-14, issued July 1, 2010, in Docket No. 090402-WS, 

A~~liCati~n for increase in water and wastewater rates in Seminole bv Sanlando Utilities Cmration: and PSC-10- 

0407-PAA-SU, pp. 10-11, issued June 21, 2010, in Docket No. 090381-SU, In re: Amlication for increase in



PAGE 1 1 1 


AUF’s argument that its allocated miate costs are less than the level approved in the 

2008 rate we is not supported by the record. Similarly, OPC’s argument that AUF has not 

demonstrated any benefit to customers fiom its association with AAI is also not supported by the 

record Based on a balanced comparison of the cost level approved in the 2008 case to the cost 

level requested in the instant case, we find the adjustments to O&M expense shall be as 

summarized 

Based on the discussion above, O&M expense shall be reduced by $283,806 ($17,457 + 

$37,482 + $227,762). The amount of allocated overhead from affiliated companies represents 

approximately 13 percent of the total approved O&M expense and 7 percent of the approved 

revenue requirement of $15,871,146. The specific rate band and system adjustments are set forth 

in the table below. 

wastewater rates in Seminole Countv by Utilities Inc. of Lonewood These PAA Orders were made final by 

c o w ’ g Orb Nos. PSC-10-0472CO-WS, issued July 27,2010 and PSC-10-0456-CO-SU, issued July 16, 

2010, respectively. 

87 

Order Nos. PSC-1 I-0010-SC-WV, p. 55; and PSC-040712-PAA-WS, issued July 20,2004, in Docket Nos. 

020896-WS and 010503-W, In re: Petition bv customers of Aloha Utilities. Inc. for deletion of uortion of &ry 

in Seven SnrineS area in Pasco County, and In re: Amlication for increase in water rates in Seven Surings Svstem in 

Pasco County bv Aloha Utilities, Inc. 

~



PAGE 112 

E. Corporate IT Charges 

1. Parties' Arguments 

AUF wiiness Szczygiel testified that AS1 provides AUF and other AAI operating 

subsidiaries IT software and software support services, which allows AUF to take advantage of 

the economies of scale provided by AAI's common ownership of numerous companies. AUF 

wiiness Szczygiel argued tha! the record shows that this structure allows AUF to share IT 

s o h and support costs with other affiliated companies, thus saving AUF &om the cost of 

acquiring such IT software and support services on its own. Witness Szczygiel testified that the 

major IT systems that AS1 provides to AUF include required asset tracking, customer service, 

billing, collections, and service delivery management. Witness Szczygiel stated that the cost of 

these Corporate IT services are allocated to AUF based on the number of customers. 

The PAA Order noted that, following the filing of this rate case, AAI divested itself of 

eight operating subsidiaries. Witness Szczygiel testified that the PAA Order mistakenly assumed 

that AAI had previously allocated Corporate IT costs to those "divested" subsidiaries, and 

thereafter "reallocated" those Corporate IT costs to AUF and other surviving operating utilities. 

Witness Szczygiel asserted that AAI's cost distribution method allocates project costs only to 

those subsidiaries that benefit hm the project. 

In its brief, the Utility contended that Hearing Exhibit 293 pvides the 13-month average 

balance of the Corporate IT Asset before and after the referenced divestment, and c o b that 

AAI did not reallocate the Corporate IT costs to the remaining systems. In addition, while 

witness Szczygiel initially disagreed with our proposal to change the amortization period for 

Corporate IT assets from six to ten years, in its brief, AUF said it no longer disagrees with our 

proposal to change the amortization period to ten years. With this exception, AUF respecmy 

submitted that the Corporate IT allocations set forth in the MFRs should be restored. 

In its brief, OPC pointed out that AUF witness Szczygiel testified that during the past 

three years, AAI had made IT investments and these costs were allocated to AUF through a 

sundry allocation that assigned the costs based on the number of customers. OPC also pointed 

out that witness Szczygiel stated that these costs were allocated at the time of the project, and the 

allocation was not updated for new systems that were added that also benefit from the IT 

improvements. OPC contended that, if this logic were expanded to expenses, the Utility would 

never charge the management fees to any new systems acquired because the management was 

put into place before the system was added. 

In its brief, OPC noted that witness Szczygiel further testified thac because the Utility 

does not re-allocate these costs, there is no need for an adjustment to remove increased allocation 

for systems that are divested OPC contended that, based on the Utility's assertion that the IT



PAGE 113 

assets were allocated at the time of the 2008 rate case and there has been no updated allocation, 

AUF had justified that an adjustment is not necessary to remove any IT allocation due to the sale 

of divested systems. However, OPC noted that since the time of the last rate case, AAI has 

purchased 23 systems in 2010 and 18 systems in 2009. OPC asserted that AUF bas not justified 

why IT costs should not be allocated in a similar fashion as other administrative expenses, and as 

such, these allocations should be updated to reflect the acquisition of new systems that will 

benefit from the services. Lastly, in its brief, OPC agreed that we should adjust depreciation 

expense to reflect a 1 0-year depreciation life. 

c. Other Intervenors 

YES, Pasco County and AG either deferred to or adopted the position of OPC on this 



In its response to a request to describe the purpose of its major software systems. AUF 

asserted that AAI's information systems are well recognized and proven products with a utility 

focus. The three major systems are Powerplant (Asset Tracking 62 Rate Case Suppofi), Banner 

(Customer Service, Billing, and Collections), and Itron Service Link (Service Delivery 

Management). During the past three years, the UtiIity stated that AAI has made signiscant 

investments to help ensure that Banner, Powerplant, and the systems supporthg customer service 

and field operations are capable of effectively supporting AAI's customers. 

Recently, in several rate cases for Utilities, Inc. cur) subsidiaries, we reduced the amount 

of information technology plant allocated fiom UI's parent to its Florida subsidiaries?' By 

Order No. PSC-lO-0585-PAA-WS, we found that the allocation of corporate sohe costs from 

the parent company to its subsidiaries should be based on equivalent residential connections 

(ERCS).'~ However, if subsidiaries are sold, the cost previously allocated to the subsidiaries 

should not be re-allocated to the surviving utilities because no added benefit was realized by the 

remaining subsidiaries. The rationale for this adjustment is that customers receive no additional 

benefit from this investment While the decision cited is a final order, we note that UI has 

protested this adjustment in a case fiom a sister utility.% 

We believe it is not fair, just or reasonable for ratepayers to bear any additional allocated 

Corporate IT plant costs. Thus, we find an adjustment similar to the adjustment made in the UI 

cases is appropriate for AUF's Corporate IT plant costs. However, there is a distinguishable 

ex See Order Nos. PSC-10-0407-PAA-SU, issued Juue 21, 2010, in Docket No. 090381-SU, In re' A~~liCati~n for 

increase m wastewater rates in Seminole Countv bv Utilities Jnc. of Lowwood, . Psc-1od4oo-PAA-wS; PSC-10- 

0423-PAA-WS; and PSCll-0015-PAA-WS, issued January 5,2011, in Docket No. 090531-WS, Io re: ADDlidOLI 

for staE-wsisted rate case in Hiehlands Countv bv Lake Placid Utilities, Jnc. 

89 Issued September 22,2010, in Docket No. 090462-WS, In re: A~~LiCation for increase in water and wastewater 

rates in Marion. Oranze. Pasco. Pinellas and Seminole Counties bv Utilities. Inc. of Florida, pp. 9-1 1. 

QSee Order No. PSC-ll-O587-PAA-SU, issued December 21,2011, in Docket No. 110153-SU, In re: Amhcation 

for increase in wastewater rates III Lee Counw bv Utilities. Inc. of Eade Rib.



PAGE 114 

difference in the way AAI allocates its IT assets and the method UI employs to allocate its IT 

assets. 

In late-filed deposition Exhibit 2, AUF witness Szczygkl stated that, when there is a 

divestiture of a system within a subsidiary, each subsidiary would have to evaluate what portion 

if any of these assets need to be written off. For the divestitures made by AUF between 2008 

and 2010, witness Szczygiel asserted that there was no write off of IT assets due to the fact that 

the divestitures were. not material to the subsidiary. As mentioned by OPC witness Dismukes, 

AUF’s Fountain Lakes irrigation and wastewater systems were recently sold. As a result of this 

divestitwe, we disagree with AlJF witness Szczygiel that the effect is immakial. Based on 

Fountain Lakes irrigation and wastewater system customer counts, we calculate a plant reduction 

of $68,670 with corresponding reductions to accumulated depreciation and depreciation expense 

of $4,578 each. 

Also, by Order No. PSC-10-0585-PAA-WS, we determined that the amortization period 

of UI’s Phoenix Project software should be increased?’ While we originally approved a six-year 

amortization period for the Phoenix Project software, we later determined in a subsequent UI 

case that a more appropriate amortization period was ten years. Major software programs, such 

as the Phoenix Project, are not “off the shelf’ software, but software tailored specifically for a 

particular utility. Software projects of such magnitude are costly and intended to have a useful 

life much greater than off-the shelf software. UI’s prior customer and billing software was used 

in excess of 21 years. 

Based on AUF witness Szczygiel‘s late-filed deposition Exhibit 2, AAI‘s 13-month 

average test year Corporate IT investment is over $115 million. Given the magnitude of its 

Corporate IT investmex& we believe that AAI will not be replacing its major IT components any 

sooner than ten years. Thus, we find that ten years is a reasonable amortization period in the 

instant case. AUF does not disagree with our proposal to change the amortization period for 

Corporate IT assets h m six to ten years. Accordingly, we find that accumulated depreciation 

and depreciation expense shall both be decreased by $136,910. 


In its position, the Utility states that the appropriate amount of Corporate IT charges 

allocated fiom AAI to AUF is $2,406,888, as reflected in the MFRS. However, based on each 

rate band and stand-done system’s MFR Schedule A-3, our staff calculated a total Corporate IT 

allocation of $2,053,657. With our plant adjustment of $68,670, we find that the appropriate 

amount of Corporate IT charges allocated from AAI to AUF is $1,984,987 ($2,053,657 - 

$68,670). 

Based on the discussion above, we find that plant, accumulated depreciation, and 

depreciation expense shall be reduced by $68,670, $141,488 ($4,578 + $136,910), and $141,488, 

91 - See Order No. PSC-lO-0585-PAA-WS, p. 12.



PAGE 115 

respectively. The following table reflects the adjustments to each rate band and stand-alone 

system. 

F. Incentive ComDensation 

Breeze Wastewater (906) I 771 I (771) 

Fairways Wastewater I (2,426) I 1,547 1 (1,547) 

Peace River Water I 18291 I 614 I (6141 

PeaceRiverWaStewater I (880) I 588 I (588) 

Total I ($68,670) I $141,488 I ($141,488) 

In its MFRS, AUF included $70,211 in bonus and dividend compensation of AAI’s 

corporate management. 


a 

AUF witness Szczygiel testified that the incentive cornpensation in the Utility’s MFRs is 

a pay-for-performance program, and is a necessary component of the AAI executive 

compensation to attract and retain qualified management. He stated that AAI has an outside 

consultant annually benchmark the Utility’s executive compensation package against the market. 

Witness Szczygiel testified that, according to the benchmarks, AAI’s executive compensation 

level is currently at or below market, and to remove the incentive compensation would cause 

executive compensation to be significantly below market, thereby making it difficult to attract 

and retain qualified management He stated that the incentive compensation model is designed 

to benefit customers by “improving customer service, enhancing customer service, enhancing 

environmental compliance, controlling costs, and improving efficiencies and productivity.” In 

support of his position on incentive compensation, witness Szczygiel cited Order No. PSC-09- 

0411-FOF-GU, where we recognized that incentive compensation is “an appropriate tool to 

motivate. employees to work efficiently and effectively. The incentive portion of salary gives the



PAGE 116 

employee the opportunity to earn the market average salary.“92 In its brief, AUF also cited Order 

No. PSC-09-0283-FOF-EI, where we recognized that reducing or eliminating incentive 

compensation would result in salaries falling below market level, thus affecting the Utility’s 

abity to compete for qualised emp1oyees.9~ 

Witness Szczygiel stated that although AAI’s proxy statement does not specifically use 

the words “customer satisfaction,” the metrics listed lead to customer satisfactioa In support of 

this position, he stated that metrics such as water quality, customer and revenue growth, and 

operation controls lead to reduced rates for customers. Witness Szczygiel asserted that although 

the Utility has not performed any surveys, the management team strives to “deliver the lowest 

cost and the most efficient cost of providing service.” Witness Szczygiel related this back to the 

operating efficiency ratios, saying that as the Utility strives for efficiency, its rates become more 

affordable. Witness Szczygiel testified that although some incentive compensation goals also 

relate to financial results, the goals are highly custorner-oriented. In its brief, AUF noted that 

“neither the OPC nor any other intervener filed testimony attempting to rebut h4r. Szczygiel’s 

testimony that AUF’s incentive compensation is needed and appropriate.” 

b m 

OPC witness Vandiver testijied that no increases in salaries are appropriate. in this 

economic climate. OPC stated that the CPI was less than two percent and no increases have been 

granted to Social Security for 2009 and 2010, and unemployment has increased. In its brief, 

OPC stated that “bpleriods of high unemployment are not the time that a company typically loses 

employees to other companies,” implying that the Utility should have no trouble retaining 

employees. OPC argued that AAI‘s proxy statement does not include criteria for customer 

satisfaction. OPC stated that the Utility’s anuual report indicates that the operating ratio is a 

performance measure for incentive compensation, thereby aligning it with shareholder interest 

rather than customer interests. In support of its position on executive incentive compensation, 

OPC referred to AAI’s proxy statement filed with the SEC to show that salaries for its top four 

executives have increased significantly in the past three years, and cited a recent order issued by 

the North Carolina Utilities Commission on September 13, 2011, in Docket No. W-218(319). 

The order reflects a decision by the North Carolina Utilities Commission to reduce executive 

salaries and wages and cornpensation, basing its decision on its view that the dramatic increase in 

executive compensation for the top four executives was ‘’unrunreasonable and overstated.” 



issue. None of these parties incIuded any argument on this issue in their respective briefs. 

92 See Order No. PSC-094411-FOFGU, issued June 9,2009, in Docket No. 080318GU, In re: Petition for rate 

increase bv Peoples Gas Svstem. p. 27. 

p3 

Order No. PSC-09+283-FOF-EI, issued April 30, 2009, in Docket No. 080317-EI, In re: Petition for rate 

increase bv Tamm Electric Comvmv, p. 58.



PAGE 117 


We have previously treated a portion of the costs allocated from a parent company as 

management costs with the remainder disallowed as investor c0sts.9~ In doing so, we found that 

some management costs do benefit the ratepayer, while other costs serve to benefit the 

shareholder. Based on the concept that activities of executive management benefit both the 

ratepayer and the shareholder, we disallowed one-half of the costs allocated from the executive 

departments. AAI rewards its executive management through bonus and dividend compensation 

and allocates this cost to its operating companies. 

As stated in its 2010 Annual Report, AAI considers a number of key measures such as 

the ratio of O&M expense to operating revenue, also called the "operating expense ratio" or 

"efficiency ratio," to evaluate its utility business performance within AAI's regulated segment 

Efficiency ratios are important because an improvement in the ratios usually translates to 

improved profitabiity. AAI reported operating expense ratios of 41.8,40.3, and 38.6 percent in 

2008,2009, and 2010, respectively. AAI asserted it reviews this and other ratios regularly and 

compares them to historical periods, to its opedng budget as approved by the AAI's Board of 

Dmtors, and to other publicly-traded water utilities. 

Decreases in the "operating expense ratio" would be looked upon favorably since the 

lower the operating expense ratio, the greater the profit for the shareholder. We believe that the 

bonus and dividend compensation of executives provides them an incentive to achieve financial 

performance measures that increase shareholder value. Because this type of executive 

compensation aligns the interests of executives with that of shareholders, we find that bonus and 

dividend compensation shall be borne by shareholders. As discussed above, we reduced O&M 

expense $17,475 to remove the incremental amount associated with executive salary increases 

since 2008. Thus, we find that O&M expense shall be reduced by $45,478 to reflect removal of 

the 2008 incentive compensation associated with these executives. 


For the reasons set forth above, O&M expense shall be reduced by $45,478 to reflect 

removal of the allocated incentive compensation associated with tw executives. The 

adjusbnenis to each rate band and stand-alone system are reflected in the table below. 

94 See Order No. PSC-92-0708-FOF-TL, issued July 24, 1992, in Docket Nos. 910980-TL, In re: AuDlication for a 

rate increase bv United Telerhone ComDanv of Florida. and 910027-TL, In re: Petition bv Bonita Surines residents 

for extended area service between Bonita Surines and the Fort Myers and Nmles exc- and 910529-TL, DLE 

Request bv Pasco Countv Board of Corn Commissioners for extended area service between all Pwo County 

exchees p. 32.



PAGE 118 

G. Salaries and Wages 


e 

AUF witness Rendell testified that the Utility’s requested merit-based and pro forma 

market-based salary increases are necessary to attract and retain qualified employees. He stated 

that, because of its current pay scale, the Utility has had difficulty retaining qualified employees. 

In support of his position on the Utility’s merit-based increase, witness Rendell cited several 

orders showing our support of increasing salaries for the purposes of remaining competitive in 

hiringand- g qua.Wed employees. He stated that the Utility has consolidated functions 

and duties and reduced employees, thereby lowering the total amount of salary expense in the 

instant case compared to the level fkom its last rate case. 

Witnesses Rendell and Szczygiel testified that the merit-based increases are performance- 

based increases, rather than across-the-board increase given to all employees. Also, witness 

Rendell asserted that for AUF to continue to provide its customers with quality services, the 

market-based pro forma increases are necessary to attract and retain qualified operators and field 

technicians. Witness Rendell stated that to do this, the Utility must be competitive in its salaries 

by having salaries at the level other utilities provide. He testified that the market-based increase 

is based on an updated market study conducted by Saje Consulting Group Inc. that compared 

Am’s salary structure to that of other similar utilities, as well as the general industry. In support 

of the study, witness Rendell cited the Utility’s last rate case, where we granted the market-based



PAGE 119 

increase, based on a market study conducted by Saje Consulting Group Inc. and Commission 

precedence. 

OPC witness Vandiver testified that AUF’s customers should not have to pay for an 

in- in salaries during the current economic conditions. She stated that the CPI was less than 

two percent, and there have been no increases for cost of living pted to Social Security 

recipients in 2009 or 2010. OPC argued that the economic market is poor, unemployment rates 

are high, and customers are struggliig to pay the current bills. In its brief, OPC stated that 

Florida‘s unemployment has continued to rise, indicating that AUF should have no trouble 

retaining employees. OPC does not believe it is appropriate to base salary increases on a dated 

market study that fails to consider the unemployment level and economic climate. Based on the 

above, OPC recommends we deny any increase. 

YES argued that h m 2008-2010, AAI unjustisably increased the salaries of its 

executive officers and is now seeking to impose these costs on the rate payers of AUF. In its 

brief, YES stated “[iln years in which this nation has been experiencing one of the greatest 

economic downturns since the Great Depression, AUF is increasing the salary of its Executives 

by over 60% and hundreds of thousands of dollars and then seeking a rate increase for the same.” 

YES argues that the magnitude of the requested salary increases is egregious. It 

concluded that “consequently, AUF should not be awarded a rate increase due. to AUF’s own 

decision to increase its Executives’ salaries even though these Ekecutives failed to meet AUF’s 

own employment objectives.” 

d Pasco county 

Pasco County argued that, for many reasons, wages and salaries should not be increased. 

It believes the economic chate does not support increased salaries. Although AUF claims it 

needs the increase to retain employees, Pasco County argued the Utility provided no evidence 

that they are having trouble with retention. In addition, there is no evidence that their retention 

rates dBer h m other utilities. Pasco County stated that AUF also failed to present any 

evidence that its salaries are low for the areas in which its employees are located. Pasco County 

asserted that AUF’s market study only looked at job descriptions and not at geographic cost of 

living. Also, AUF provided no numbers or examples of employees that left due to low pay. 

Pasco County concluded that, with high unemployment in Florida, AUF should have little 

problem finding qualified employees. 

AG has adopted the position of OPC on this issue but did not provide any argument on 

this issue in its brief.



PAGE 120 


In its MFRs, AUF requested the following increases in Salaries and Wages expense: 

Net Terminations & New Hires 

4% Wage Increase - Direct 

4% Wage Increase - Admin. 

Market -Based Study Increax 

Total: 

Normalization Pro Forma Total 

$46,601 $136,910 $183,511 

50,109 41,338 91,447 

31,033 41,753 72,786 

0 60,670 60,670 

$127,743 $280,671 $408,414 

Our &Audit Finding No. 6 addressed expenses for terminations and new hires. Issue 

2 of PAA Order No. PSC-ll-O544-PHO-WS, deemed stipulated, ordered a reduction of 

$100,087 to Am’s requested expense for net terminations and new hires?’ This reduction 

results in a revised requested amount of $83,424, compared to A Ws initial request of $183,511, 

shown on the table above. 

With regard to AUF’s requested four percent normalization increase, four percent pro 

forma increase, and pro forma market-based study increases totaling $224,903 ($50,109 + 

$31,033 + $41,338 + $41,753 + $60,670), we believe the Utility should be granted a portion of 

the requested increases. When compared to the salaries and wages amounts approved in the 

Utility’s 2008 rate case, the salary and wages amounts requested in the instant case are less. As 

shown in the table below, the Utility has requested $268,823 less than what was approved in the 

2008 rate case. 

Comparison of Salaries and Wages h m 

Last Katc Case to Requested in Current Case 

I LastRale I 

summary of 

Salaries &Wages 

By Rate Band & system 

Water Bands 

Approved Amount Difference 

- Water Rand 1 

B ~ Hill z - Water 

I Fairways - Water 

Pe ace River - Water ~~ 

Total Water: 

~ ~ 

nnl 

0 ~~~~ ~ ~ ~ 

01 

I nl - I $1,182,976 I 

$270,576 

6,3 16 

21,390 I 

in~xhx 

-->--- I , 

$951,823 I 

$8,575 

$6,316 

$2 1,390 

xin~xm 

---7--- 

($231,153) 

- See Order No. PSC-11-0544-PHO-WS, p. 63.



PAGE 121 

SummaryOf 

Salaries & Wages 

By Rate Band & System 

Wastewater Bands 

Wastewater Band 1 




Breeze Hill - Wastewater 

Fairways - Wastewater 

Peace River - Wastewater 

Total Wastewatex 

Approved 

Last Rate AUF 

CaSe MFR 

Amount Amount Difference 

105,329 60,3 19 ($45,010) 

3 15,554 326,458 $10,904 

66,090 41,525 ($24,565) 

97,449 79,372 ($1 8,077) 

0 14,534 $14,534 

0 13,670 $13,670 

0 10,874 $10,874 

$584,422 $546,752 ($3 7,670) 

I I I 

Total: I $1,767,398 I $1,498,575 I ($268,823) 

Our staff indexed Commission-approved hourly rates for maintenance workers to 

compare with the requested annual salaries of AUF's Utility Tech positions.% Based on this 

indexing, it appears the requested pro forma market-based study increase is reasonable. We 

believe that to deny AUF any increase would be a disincentive for the Utility to continue to cut 

expenses. However, recognizing the sensitivity of the economic climate in Florida and 

throughout the US., we find it would be unreasonable to &ow the Utility both the four percent 

normalization and four percent pro forma salary increases. Therefore, we deny the requested 

four percent normalization and pro forma salary increases. Based on the above, our adjustments 

shall be as shown in Table 10 below. 

In response to staff data requests, AUF agreed that the $3,869 related to the salary of the 

Senior Vice President of Corporate Development should be treated below-the-line because it 

related to the acquisitions of new systems, which should be borne by shareholders. This 

treatment is consistent with our decision in the Utility's 2008 rate ~ase.9~ Neither OPC nor the 

other parties addressed Corporate Development and Acquisitions. The allocated share for the 

instant case is $714. Accordingly, salaries and wages shall be reduced by $714, with a 

corresponding adjustment made to reduce payroll taxes, as shown in Table 10. 

96 

See Order No. PSC-O1-2511-PAA-WSKs, issued December 24,2001, in Docket No. 010396-WS, In re: Auulication 

for staff-assisted rate me in Brevad Comty bv Burkim Entedses. Inc., p. 33. 

97& pp. 89-90.



PAGE 122 


Based on the above, Salaries and Wages - Employees expense shd be reduced by 

$167,225. Accordingly, a corresponding adjustment shall be made to reduce Payroll Taxes by 

$12,793. The specilic adjustments to each rate band and system are set forth in Table 11 below: 

H. Bad Debt ExDense 

Table 1 1 -Total Salary and Wage Reduction & Elimination of Corporate 

Development and Acquisitions 

Peace River - Sewer 

Fairways - Sewer 

Breeze. Hill - Sewer 

Total Wastewater: 

(908) 

(1,367) 

(1,312) 

(69) 

(105) 

Total: I ( $1 67,225 ) 1 ($12.7931 

The Utility recorded bad debt expense of $389,420 for the test year. 

1. Parties’ Armments 

e 

Witness Szczygiel asserted that our policy is to set bad debt expense using a 3-year 

average. Am’s 3-year average calculation of bad debt expense is $386,221. In its brief, the 

Utility argued that the record shows tha! AUF’s bad debt expense during the test year was not 

abnormal, and there is no legitimate basis for adjusting those expenses. 

In its brief, the Utility contended that witness Dismukes failed to demonstrate that the 

utilities in the comparison group have service areas with economic conditions similar to AUF, 

and fails to consider the credit worthiness of AUF’s customers compared to other systems.



PAGE 123 

Moreover, AUF asserted that Witness Dismukes made no effort to show that the utilities in the 

comparison group have rate structures similar to AUF’s unique cap-band structure. To this 

point, the Utility cited to pages 192 and 193 of Order No. PSC-96-1320-FOF-WS, wherein this 

Commission recognized that utilities without uniform rates are likely to have higher bad debt 

expenses. Finally, the Utility argued that imputing historic bad debt factors of other utilities to 

AUF ignores the Wtelhood that the current economic downturn will have a significant im act on 

bad debt expense, wherein AUF cited to page 3 1 of Order No. PSC-92-0580-FOF-GU which 

expressly noted that an overall economic downturn will have a pronounced impact on bad debt 

expense regardless of increased collection efforts. 

OPC witness Dismukes testified that AUF has experienced billing problems fiom as far 

back as 2007. In its brief, OPC pointed out that the customer testimony at the Service Hearings 

is replete with complaints about billing problems. OPC also argued that a review of the number 

of back-bills shown in Hearing Exhibit 300 shows that the Utility had 141 backbills in 2009,186 

in 2010, and 97 in the first three months of 201 1. Although AUF witness Szczygiel testified that 

aU the residential meters had been installed prior to the last rate case, OPC noted that the Utility 

continues to have baing problems. 

OPC witness Dismukes argued that AUF’s requested test year bad debt level of $389,421 

is signiscantly greater than the average for comparable water utilities and results &om its poor 

service and billing practices. Witness Dismukes asserted that the difference is substantial 

enough that we should place the burden on AUF to demonstrate why the ratepayers should be 

burdened with the additional costs. Witness Dismukes provided a comparative analysis of the 

Utility’s bad debt to a peer group of water and wastewater utilities and recommends an 

adjustment of $310,816 to reduce the test year expense to $78,605. 

YES argued that “AUF’s poor water quality, poor customer service, bad billing practices, 

and unaffordable rates all contribute to and exacerbate a bad debt expense by compelling 

customers to default on their AUF bffls and vacate properties where AUF supplies water and 

wastewater services for alternative housing that offers more affordable utility rates while 

providing a higher quality of water, efficient customer service, and affective billing practices.” 

YES concluded that, “AWs excessive bad debt expense is merely a result of Am’s own 

mismanagement and, therefore, should be discounted.” 

d. Pasco County and AG 

Pasco County and AG adopted the position of OPC on this issue. Neither party included 

any argument on this issue in their respective briefs. 

98 

Issued June 29, 1992, in Docket No. 910778-GU, In re: Petition for a rate increase bv West Florida Namal Gas 

w. 

98



PAGE 124 


In its filing, the Utility recorded Bad Debt expense of $389,420 for the test year, as well 

as a pro forma bad debt expense increase of $55,411. This represents a total request of $444,832 

for bad debt expense. 

We find there. are four reasons why we should use the three-year average to determine the 

appropriate bad debt expense level rather than OPC's arguments for using a peer group analysis 

to determine the amount, First, OPC witness Dismukes conceded that she could not quantify 

how Am's alleged billing, customer service or meter-reading practices impacted the Utility's 

level of bad debt expense. Second, we recognize that utilities without uniform rates are likely to 

have higher bad debt expenses. Third, an overall economic downturn will have a pronounced 

impact on bad debt expense regardless of increased collection efforts. Fourth, numerom 

Commission orders support the convention that Bad Debt expense should be based on a 3-year 

average. We have set bad debt ex ense using the three-year average in multiple electric,99 gas,'" 

and water and wastewater cases.'" We approved a 3-year average in these cases based on the 

premise that a three-year average fairly represented the expected bad debt expense. Overall, the 

basis for &terminin g bad debt expense has been whether the amount is representative of the bad 

debt expense to be incurred by the Utility. 

However, we do agree with OPC witness Dismukes that a true 3-year average should be 

used. For PAA purposes, the amount of bad debt expense was based on a 3-year average of the 

year prior to the test year, the test year itself, and the 12-month period that included some months 

in the test year. However, we find the bad debt expense shall be based on a true 3-year average 

with no duplicative months included in the cdcdation. In addition, it has been determined that 

AUF included an amount of $1 16,069 in its calculation related to a dispute over the payment for 

reuse from the South Seas WPVTP. Because we have approved a zero rate for the reuse fiom this 

facility,'o2 this amount shall not be included in the calculation of Bad Debt expense. 

Based on the 3-year average calculation, AUF shall be entitled to bad debt expense of 

$265,457 which we believe is representative of AUF's bad debt expense on a going-forward 

basis. As a result, ALJF's bad debt expense shall be reduced by $179,375 ($444,832 - $265,457). 

The table below shows the adjustment for each rate band and stand-alone system. 

99 

&E Order Nos. PSC-944170-FOF-E1, issued February 10, 1994, in Docket No. 930400-EL In re: ADDlication for 

a Rate Increase for Marianna electric oDemtious bv Florida Public Utilities Com~ans p. 20; PSC-93-0165-FOF-EJ, 

issued February 2, 1993, in Docket No. 920324-EL In re: Amlication for a rate increase bv TamDa Electric 

~mDany. pp. 69-70; and PSG92-1197-FOF-EI, issued October 22,1992, m Dockel No. 910890-EL ~~~~ In re: Petition 

~ ~ 

for a rate increase bv Florida Power Commatio% p. 48. 

%ee Order Nos. PSC-92-0924-FOF-GU, issued September 3, 1952, in Docket No. 91 IlSOGU, In re: Amlication 

foryrate increase by P ~oD~~s Gas System. Inc.. D. 6: and PSC-92-0580-FOF-GU. DD. 30-31. 

101 

Order Nos. PSC-10-0407-PAA-SU, PSd-1&0423-PAA-WS, PSC-G9-0385-FOF-WS, pp. 92-96; and PSC- 

10-0585-PAA-WS, pp. 43-44, 

in 

Order No. PSC-10-0602-T, issued October 1,2010, in Docket No. 100049-WS, In re: Petition for 

a~moval of change in reuse rate bv Aaua Utilities Florida. Inc., p. 4.



PAGE 125 

I. Rate Case ExDense 

Water Band 1 

Water Band 2 

Water Band 3 


(22,987) 

(11,052) 

Water Band 4 

(108,563) 

Peace River Water 

Total: 

On September 1,2010, AUF submitted MFRs requesting $670,268 for rate case expense. 

Based on documented rate case expense actually incurred, we approved rate case expense of 

$778,269 at the PAA Commission Conference held on May 24,2011.’” Due to timely protests 

filed on July 1,201 1, by OPC and Ms. Lucy Wambsgan, the issue of rate case expense is being 

relitigated 

1. Parties’ Armun ents 

a 

AUF asserted that the appropriate amount of rate case expense is $1,584,791. AUF 

asserted that it attempted to use our PAA process to minimize rate case expense in this rate case. 

However, AUF alleged that OPC propounded excessive discovery, ignored precedent, and 

attempted to relitigate a number of settled issues. AUF further states that it responded to over 

991 interrogatories and 347 requests for production of documents, including subparts. Of that 

discovery, AUF estimates that OPC propounded 796 interrogatories and 299 requests for 

production of documents. AUF asserted that OPC’s massive discovery has caused AUF to incur 

a significant amount of rate case expense. AUF stated that its requested level of rate case 

expense “has been properly documented and shown to be reasonable in light of the issues, the 

number of parties, the discovery, and the litigation tactics employed by interveners and other 

interested third parties.” 

Irn See Order No. PSC-I 1-0256-PM-WS, p. 84. 

Breeze Hill Water (458)



PAGE 126 

OPC claimed that rate case expense is overstated and should be. reduced by $265,000. 

OPC witness Dismukes asserted that ratepayers should not have to pay any more than those costs 

that are reasonable and necessary. The MFRs included $670,268 for rate case expense. As of 

July 31, 2011, AUF reported a revised expense amount of $1,249,320. OPC argued that the 

expense requested by the Utility is inflated with costs that ratepayers should not have to bear. In 

addition, OPC asserted that AUF should be required to share rate case expense 5050 between 

ratepayers and stockholders, the same as in a 2007 case for an AUF affiliate in New Jersey. 

OPC‘s recommended adjustments bring the revised requested rate case expense of 

$1,249,320 to $809,275. If this adjusted amount is split 50/50 between the ratepayers and 

shareholders, the amount that should be. allowed for purpose of setting rates is $404,638. 

Finally, OPC contended that we should order that rate case expense approved in this proceeding 

should not be permitted for recovery until the rate case expense from the prior proceeding has 

been my amortized. 

a 

YES argued that “the evidence is overwhelming that AUF’s rate case expense is 

exorbitant and unreasonable.” YES stated that the hourly rate of AUF’s outside legal counsel of 

$315 per hour is unreasonable. YES argued that the amount of legal expense associated with the 

incremental difference between the hourly rate charged to AUF and the average hourly rate for 

attorneys in the State of Florida as shown in the Florida Bar Rate Survey should be stricken h m 

rate case expense. In addition, YES stated that Am’s outside counsel and in-house counsel 

failed to provide adequate detail of the work performed in this case. Finally, YES argued that 

Am’s outside consultants, in-house counsel, and outside counsel each “billed tens of thousands 

of dollars to review the same discovery responses.” YES concluded that “AUF should not be 

allowed to chum this fle at the expense of Florida’s rate payers,” and recommended that this 

practice merits a reduction to rate case expense. 

d. Pasco CounW and AG 

Pasco County and AG have adopted OPC’s position on this issue. Neither party included 

any argument on this issue in their respective briefs. 


Our staff requested an update of the actua3 rate case expense incurred, with supporting 

documentation, as well as an estimate of the projected amount to complete the case. On 

November 22, 2011, AUF updated its actual and estimated rate case expense and submitted 

revised totals in late-filed deposition Exhibit 12. In its update, ATJF summarized expenses 

incurred through October 31,201 1 of $1,381,622, and projected expenses through completion of 

the case of $203,169, for a total requested rate case expense of $1,584,791. However, the 

tabulation of several different categories of expenses incurred through October 31, 2011 in the 

lead table of latpfled deposition Exhibit 12 appear to be incorrect. The $1,381,622 expenses



PAGE 127 

incurred through October 31,201 1 and projected expenses through the completion appear to be 

overstated by $952. The components of the corrected rate case expense are in Table 12 below. 

Pursuant to Section 367.081(7), F.S., we shall determine the reasonableness of rate case 

expenses and disallow all rate case expenses determined to be unreasonable. Also, it is the 

Utility's burden to justify its requested costs.'04 Further, we have broad discretion with respect 

to allowance of rate case expense; however, it would constitute an abuse of discretion to 

automatically award rate case expense without reference to the prudence of the costs incurred in 

the rate case proceeding.'o5 AS such, we have examined the requested actual expenses, 

supporting documentation, and estimated expenses as listed above for the current rate case. 

Based on our review, we find several adjustments are necessary to the revised rate case expense 

estimate. 

a. Lead 

AUF included $786,870 in its late-fled deposition Exhibit 12 for legal representation 

fTom Holland & Knight law firm. Based on review of the invoices for actual expenses, we find 

the following adjustments listed in Table 13 below are appropriate. 

Table 13 -- Adjustments to Legal Expenses 1 

Unsupported by Invoices 

($8,793) 

Unrelated Rate Case Expense (13,182) 

'~IFloridaPowerComv.Cresse.413 So.= 1187,1191 (Fla 1982). 

'Os I Meadowbroak Util. Svs.. Inc. v. FPSC, 518 So. 2d 326,327 @I& 1' DCA 1987).



PAGE 128 

First, the calculation of invoices incurred through October 31,2011, total $659,701. As 

shown on the summary page of AUF’s late-filed deposition Exhibit 12, the Utility included total 

incurred costs through October 3 1,201 1 of $668,494. Therefore, we have reduced the amount of 

legal expense by $8,793 for the unsupported difference. Second, as listed above, $13,182 of 

legal expenses were unrelated to the instant docket. These include: calls made to and from staff 

regarding certification requirements, issues related to an acquisition workshop, legislative issues, 

researching the test year approval letter for Chuluota, and reviewing case law on municipalities 

acting against private utilities. Therefore, legal rate w e expense shall be reduced by $13,182 

for work unrelated to this rate case. 

Prior to AUF sling its MFRS, the Utility incurred legal costs of $61 1 for research and 

analysis associated with presenting an ROE witness. However, AUF used the Commission ROE 

leverage formula as opposed to sponsoring an ROE witness in this case. Therefore, the cost of 

$611 related to this exercise shall be removed in light of the fact that the Commission ROE 

leverage formula was used in the MFRS. 

Through the direct testimony of OPC witness Vandiver and the rebuttal testimony of 

AUF witness Sxzygiel, both parties have agreed that $3,313 should be removed from rate case 

expense for MFR deficiencies. Of this total, wiiness Vandiver recommended $2,335 and $978 

be removed from legal and consultants, respectively. In addition, we note that there are legal 

invoices totaling $546 that are also related to h4FR deficiencies. Therefore, legal expense shall 

be reduced by $2,881 ($2,335 + $546) and consultant expense shall be reduced by $978 for work 

associated with MFR deficiencies. 

Pursuant to Order No. PSC-09-0385-FOF-WS,‘06 the Utility’s overall quality of service 

was found to be marginal, except for Chuluota, which was deemed unsatisfactory. As a result, 

AUF was required to implement a quality of service monitoring plan The Utility has included 

$7,541 in legal expenses related to the monitoring plan. These charges shall be removed from 

rate case expense because these costs are not related to the processing of this rate case. 

Accordingly, we have reduced legal expenses by $7,541. 

On July 11,201 1, AUF fded a cross-petition to protest the following eight portions of the 

PAA Order: 1) AUF’s quality of service, 2) pro forma plant additions in AUF’s rate base, 3) rate 

case expense, 4) the Commission leverage formula used, 5) the ROE penalty applied in the PAA, 

6) salary expense, 7’) adjustments to IT project cost allocations, and 8) incentive compensation. 

On August 24,201 1, the Utility filed a Withdrawal of Distinct Cross-Petition Issue, related to the 

pro forma plant addition issue, We find the legal costs associated with withdrawing a motion 

that was initially presented by the Utility shall be removed from rate case expense. These costs 

are calculated to be $1,434. As such, we have reduced legal expense by $1,434. 

On October 10,201 1, YES served a subpoena and notice for deposition on Mr. Grisham, 

a field employee of AUF. YES asserted that Mr. Grisham’s testimony was necessary to attest to 

Am’s quality of service. Further, YES stated, “NO other employee of Aqua has such extensive, 

106 

See order No. PSC-11-0256-PAA-WS, p. 21.



PAGE 129 

unique, singular, and ikt hand knowledge of the quality of service provided to Aqua’s 

customers residing at Arredondo Farms or Aqua’s Monitoring Program violations at the 

property.” On October 18,201 1, AUF and Mr. Grisham fled a Joint Motion to Quash Subpoena 

and Notice of Deposition served by YES. Subsequently, AUF and Mr. Grisham’s Joint Motion 

to Quash Subpoena and Notice of Deposition was denied by this C0mmissi01~’~~ As a result of 

the motion being denied, the legal costs of $7,139 related to AUF and Mr. Grisham’s Joint 

Motion shall be removed. 

Also, we note that the outside lead counsel for ALE received a $25 per hour increase 

over the hourly rate paid in the 2008 rate case. Again, because of the economic conditions, we 

find that this increase was neither prudent nor reasonable. Because we calculate he worked 

1,083.3 hours on this case, the incremental increase quais $27,083. Accordingly, legal rate case 

expense shall be reduced by this amount. 

Finally, we find that AUF’s estimated legal costs to complete the case of $118,440 are 

excessive. Holland & Knight did not provide a detailed breakdown of the activities or duties to 

be performed in the 376 projected hours, nor any time allocations. In AUF’s 2008 rate case, we 

found the total amount of estimated hours to complete that case was 287. We believe this is a 

more appropriate amount of hours for post-hearing procedures. Therefore, the 376 projected 

hours shall be reduced by 89 hours. At $315 per hour, the total reduction is $28,035 (89 hours x 

$315), and that amount shall be removed fiom rate case expense. 

The amount, including projected completion costs, submitted by AUF in late-filed 

deposition Exhibit 12 for legal representation fiom Holland & Knight totaled $787,050. Based 

on stafps calculation of the amounts shown on the summary page of late-filed deposition Exhibit 

12, this total was overstated by $180 as shown on Table 12 above. Thus, the corrected legal 

expense submitted by the Utility in late-filed deposition Exhibit 12 is $786,870. 

Our adjustments to legal expense total $96,879 ($68,664 + $28,035 + $180). 

b. Consultants 

Based on review of the rate case expense support documentation provided by AUF, we 

find several adjustments are necessary for the cost of consultants that were retained by the 

Utility. First, Table 11 shows the variance in AUF’s calculation of fees incurred for consultants 

as compared to our calculation of fees incurred for consultants supported by invoices. 

A~cordingly, consultants expense shall be increased by $66 for calculation errors on the 

5-3 pqe of late-filed deposition Exhibit 12. 

AUF utilized the services of the following four consultants: 1) Timothy P. Ward, 2) 

Ronald J. Pasceri, 3) AUF witness Seidman, and 4) Daniel Franceski. The summary page of 

late-fled deposition Exhibit 12 shows hourly rates for Mr. Ward, Mr. Pasceri, and Mr. Frances& 

that are somewhat different than the hourly rates included on the invoices of each consultant. No 

’”SeeOrderNo.PSG11-0501-PCO-WS, issuedOctobn26,2011, mtbkdocket.



PAGE 130 

p m took issue with the rate at which the consultants charged AUF. However, we find only the 

amounts shown on invoices shall be allowed for recovery. Table 14 below shows the hourly rate 

variances and the calculation of our $8,283 adjustment. 

Table 14 -- Hourly Rate Adjustment 

Hourly Rate Hourly Rate 

on FXH 340 on FXH 340 Number 

Consultant SWOElly Invoices Variance ofHours Adjustment 

Timothy P. Ward $109 $107 ($2) 1,767.2 ($3,534) 

Ronald J. Pasceri $87 $85 ($2) 1,308.0 ($2,616) 

Daniel T. Fmceski $87 $85 ( $2 ) 1,066.4 ($2,133) 

Tntal- 

(*I( 3%1\ 

A review of the total consulting invoices submitted by AUF shows that AUF overstated 

the number of hours billed for consultants by 177.4 hours. Therefore, we have removed the 

overstated hours and associated costs of $15,581 h m consulting expense. A detailed 

breakdown of this calculation is below in Table 15. 

As discussed above, both OPC witness Vandiver and AUF witness Szczygiel agreed to 

remove $3,313 h m rate. case expense for MFR deficiencies, of which, $2,335 is for legal 

expense and $978 is for consultants. The $978 consultant portion is related to two separate 

invoices: one for Daniel T. Franceski for $638 and one for Ronald Pasceri for $340. In addition 

to the $978, we find that $1,258 for invoices from Daniel Franceski related to deficiency 

responses shall be removed. Based on removal of $978 which was discussed earlier, plus 

removal of an additional $1,258, we find that consultants’ expense for costs pertab&g to MI3 deficiencies of $2,236 shall be removed. 

AUF included $1,488 in consulting expenses for Mr. Pasceri that were related to 

reviewing a Virginia Commission order and preparing rate base analyses. Because Mr. Pasceri 

was working on AAI systems in a different state, this rate case consulting expense of $1,488 

shall be removed, and consulting expense is reduced by this amount In addition, our staff 

calculated $2,168 in consulting expenses for Mr. Pasceri that were related to the Sarasota system. 

Because the Sarasota system is in a non-jurisdictional county and not part of this rate. case, -e 

have removed this expense and reduced consulting expense by $2,168.



PAGE 131 

The Utility’s projected number of hours for future expenses for consultants total: 56 

hours for Mr. Ward, 3 hours for h4r. Pasceri, $7,500 for witness Seidman, and 59 hours for Mr. 

Franceski. The discovery actions completion date was scheduled for November 22,2011. Mi. 

Ward, Mr. Pasceri, and Mr. Franceski dealt with discovery related responses. Late-filed 

deposition Exhibit 12 included hours worked and expenses incurred through October 31, 201 1. 

Therefore, both consultants would have had approximately one more month of consulting work 

to complete before the discovery completion deadline. Considering a typical eight-hour day, the 

consultants would have worked approximately seven days for Mr. Ward, a half day for Mr. 

Pasceri, and seven and a half days for Mr. Franceski. We find these estimates are reasonable. 

However, based on calculation errors, we find a reduction of $246 for estimate to completion is 

appropriate, and we have reduced future expenses for consultants by this amount. 

Based on the above, we find rate case expense for consultants shall be reduced by 

$29,936 ($66 + $8,283 + $15,581 + $2,236 + $1,488 + $2,168 + $246). 

a 

After reviewing timesheets provided by the Utility in late-filed deposition Exhibit 12, we 

tind that adjustments are needed. First, the $838 adjustment shown on Table 11 above should be 

made due to AUF’s calculation errors. Second, the following AS1 employees have rate case 

expense associated with hours worked that are not supported by a detailed description: Kimberly 

Joyce (30 hours at $109 per hour totaling $3,270) and Kelly Bums (27 hours at $39 per hour 

totaling $1,053). It is our practice to rely on time records and descriptions to support Utility time 

spent on rate cases.1o8 As such rate me expense shall be reduced by $4,323. 

Also, we note that AS1 employees Brian Devine, Kimberly Joyce, Kelly Bums and Mary 

Hopper all received hourly rate increases of $6, $29, $1, and $16, respectively, over the hourly 

rates allowed in 2008. Because of the economic conditions, we find that these increases were 

neither prudent nor reasonable. Based on hours worked of 36,122,30, and 148. respectively, the 

incremental increases are calculated to be $216, $3,538, $30, and $2,368, respectively. 

Therefore, the total amount of the increase for these four AS1 employees is $6,152, and rate case 

expense shall be reduced by this amount, 

In addition, we find the Utility’s amount of estimated future expense for AS1 needs to be 

adjusted. AUF projected 439 hours through completion. Our review of the Utility’s supporting 

documentation indicates that AS1 employees worked 2,800 hours as of October 31,201 1. Based 

on timesheets provided, AS1 employees began work on the instant docket five months prior to 

the MFR filing date. This equates to approximately 156 hours per month (2,800 hod18 

months). At this rate, with approximately two months remaiDing in the case, AS1 employees 

would need 312 hours and not the 439 hours projected to complete this case. Using the 312 

hours reduces the hours to complete the case by 127 hours. We have adjusted the amount of 

1Gl 

See Order Nos. PSGl1-0256PAA-WS, p. 102; PSC-07-0130-SC-SU, issued February 15,2007, in Docket No. 

060256SU, In re: Auulication for increase in wastewater rates in Seminole County bv Alafava Utilities, Inc.. p. 3 1; 

and PSC-074205-PAA-WS, issued March 6,2007, in Docket No. 060258-WS, In re: A~~licati~n for increase in 

waier and wastewater rates in Seminole County bv Sanlando Utilities, Com., p. 27



PAGE 132 

hours based on the average monthly hours that have been incurred for each employee and 

applied to the estimated future duration of this case. These adjustments are as follows: Brian 

Devine - reasonable estimate to complete the case is approxjmately 26 hours at $46 per hour 

versus the 38 hours estimated by the Utility resulting in an adjustment of 12 hours and a 

reduction of $553; Kim Joyce - reasonable estimate to complete the case is approximately 81 

hours at $109 per hour versus the 122 hours estimated by the Utility resulting in an adjustment of 

41 hours and a reduction of $4,444, Kelly Bums - reasonable estimate to complete the case is 

approximately 20 hours at $39 per hour versus the 30 hours estimated by the Utility resulting in 

an adjustment of 10 hours and a reduction of $391; Mary Hopper - reasonable estimate to 

complete the case. is approximately 99 hours at $94 per hour versus the 148 hours estimated by 

the Utility resulting in an adjustment of 49 hours and a reduction of $4,650; Nameer Bhatti - 

reasonable estimate to complete the case is approximately 72 hours at $39 per hour versus the 79 

hours estimated by the Utility resulting in an adjustment of 7 hdurs and a reduction of $287; 

Allison McVicker - reasonable estimate to complete the case is approximately 15 hours at $42 

per hour versus the 22 hours estimated by the Utility resulting in an adjustment of 7 hours and a 

reduction of $309. These adjustments result in an adjustment of 127 hours and a reduction of 

$10,633. As such, rate case expense shall be reduced by $21,946 ($838 + $4,323 + $6,152 + 

$10,633). 

d. Other 

In late-filed deposition Exhibit 12, the Utility recorded incurred costs of $8,193 for 

“printer - filii,’’ $2,500 for PWC Review, and $3,530 for other expenses. However, no 

documentation supporting a detailed description of these expenses has been provided. 

Accordingly, the full $14,223 shall be disallowed fiom rate case expense. Also, while the Utility 

recorded $60,114 incurred for noticing requirements, the invoices for noticing total only 

$59,209. Therefore, we have removed $904 fkom rate case expense for the unsupported balance. 

AUF estimated future travel expenses of $11,860. Because there is no detailed 

description of what these charges represent, nor any indication as to how the Utility arrived at 

this estimate, the entire $11,860 shall be disallowed. In total, we find that ‘’Other” rate case 

expense shall be reduced by $26,987 ($14,223 + $904 + $11,860). 

e. Treatment of Rate Case Exuens e 

OPC witness Dismukes testified that the.reasonable amount of rate case expense allowed 

in this case. should be shared between the ratepayers and AUF’s shareholders. Based on 

decisions in New Jersey, Illinois, and Minnesota, she recommended that only 50 percent of the 

allowed amount of rate case expense be considered for purposes of setting rates in the instant 

case. 

Witness Dismukes also testified that we should discourage utilities &om filing rate cases 

“one on top of another with little time in between, such as happened with this case.” She 

recommended we defer recovery of the rate case expense approved in this we until the 

unamortized balance of rate case expense fiom the 2008 proceeding has been fully recovered.



PAGE 133 

In its brief, AUF argued that there is no statutory or precedential support in Florida to 

either deny the Utility recovery of documented rate case expense or to defer recovery of same. 

AUF believes OPC’s recommendation on these points is without legal merit and is inequitable. 

AUF concluded that “p]aving caused rate case expense to increase with its voluminous 

discovery, it is unfair for OPC to now recommend that the FPSC deny AUF its lawful right to 

recover all of its reasonable rate case expense in this case.” 

Based on review of the record in this case, we find that there is no statutory basis or 

prdential support in Florida to adjust the amount of rate case expense the Utility may be 

permitted to recover through rates in the manner recommended by OPC. Thus, neither of OPC‘s 

approaches shall be implemented in this case. 


In summary, we find that Am’s revised rate case expense shall be decreased by 

$175,748, for a total rate case expense of $1,409,043. Table 16 below illustrates our calculation 

of rate case expense. 

EXP- Total 

MFRF3-10 Incurred Addit’l Per Comm’n Comm’n 

Based on the four-year amorthtion of rate case expense pursuant to Section 367.0816, 

F.S., we calculate the annual rate case expense to be $352,261 ($1,409,043 divided by 4). and 

this amount shall be recovered over four years. Table 17 reflects the annual amortization 

adjustments of rate case expense for each rate band and stand-alone system.



PAGE 134 

J. Pre-Reuression ODerating Income 

Based on the stipulated adjustments and OUT adjustments approved above, we calculate 

the test year pre-repression water operating income to be $166,868, and the test year pre- 

repression wastewater operating income to be $764,933. The test year operating income or loss 

before any provision for increased revenues is shown in the attached Schedule 4-A and 4-B, as 

well as the table below. 

Operating Incomd(Loss) 

Operating Income or 

(Operating Loss) 

Water Band 1 $214,765 

Wastewata Band 1 (422) 

Water Band 2 

Wastewater Band 2



PAGE 135 

A. Rate Cm Thresholds 


aAUI: 

E. RATES AND CHARGES 

AUF did not address this issue in its brief. 

b. OPC and AG 

OPC and AG changed their position to DELETED in their respective briefs. 

c. YES and Pasco County 

YES and Pasco County either deferred to or adopted the position of OPC on this issue, 

and presented no argument on this issue. 

2. Commission Analysis and Conclusion 

As listed in the F'rehearing Order in this case, this is a fallout issue,'Og and no party 

presented any argument in its brief on this issue. Rates are a function of both the revenue 

requirement and billing determinants. A subsidy limit of $12.50 (applicable only to the 

residential class, based upon usage levels of seven kgals per month for the water systems and six 

kgals per month for the wastewater systems) has been stipulated to by the parties."o Our 

&dings regarding billing determinants and the approved revenue requirements are set out earlier 

in this Order. Using the stipulated subsidy limit of $12.50 in conjunction with our approved 

billing determinan ts and revenue requirements for the existing rate bands and stand-alone 

systems, the appropriate rate cap thresholds represent fallout calculations. Based on the above, 

the appropriate rate cap thresholds to be used to cap residential customer bills are $68.30 for the 

water system and $87.53 for the wastewater system. 

B. Rate Structures 

1. Parties' Arments 

a. AUF, OPC, AG, and YES 

AUF did not address this issue in its brief. OPC and AG took no position on this issue. 

YES deferred to the position of OPC on this issue. Other than Pasco County, no other party 

presented argument on this issue in their respective briefs. 

io9 

SeePrehearhgOrder,ChderNo. PSC-110544-PHO-WS, issuedNovember23,2011, inthis case. 

bid 

"O -



PAGE 136 

b. Pasco County 

Pasco County argued that Am's move toward uniform rates unfairly discriminates 

against the customers of certain systems in violation of Section 367.081(2)(a)I., F.S., and 

Southern States Utilities. nk/a Florida Water Services Cornration v. Fla Public Service 

Commission 714 So. 2d 1046 (Fla 1st DCA 1998). For the 84 percent of the AUF customers in 

Pasco County, those of the Jasmine Lakes and Palm Terrace systems, the $12.50 subsidy and 

accompanying rate increase have resulted in rate shock Pasco County believes this rate shock 

comes largely due to the subsidy that numerous systems have to pay to support the more costly 

system. 

Pasco County acknowledged that a move back to stand-alone rates is likely not practical 

at this point However, it believes that the record in this case shows that "any further rate 

.. 

increase, or a move to uniform rates, is unfairly discnrmnato ry." Pasco county charged that 

"this discriminaton is the mere whim of a non-responsive corporation ftom another state that 

either buys new systems without regard to the rate impact to its other customers or for the direct 

purpose of supporting its desire to move to uniform rates." Pasco County cited the addition of 

the Breeze Hill and Peace River systems as examples of how AUF's business model forces 

existing customers to subsidize the customers of newly acquired systems. 

Pasco County argued that the move to rate band consolidation is driven by Am's 

practice of buying unrelated systems. Pasco County concluded that "[bland consolidation ( hm 

4 to 2), or creating uniform rates, is not appropriate because these disparate systems have no 

uniformity in water quality, there is no interconnection and the rates become ever-increasingly 

discriminatory in Violation of Section 376.081, F.S." 


As listed in the Prehearing Order in this case, this is a fallout issue."' The Utility's 

current residential water rate structure consists of a three-tiered i nclii block rate structure, 

with usage blocks for monthly consumption of 0 to 5 kgals, 5.001 to 10 kgals, and all usage in 

excess of 10 kgals. The current usage block rate factors are 1.00, 1.25, and 3.00, respectively. 

The Utility is requesting that the current rate structure be changed to a three-tiered i ncli 

block rate structure with usage blocks for monthly consumption of 0 to 6 kgals, 6.001 to 12 

kgals, and all usage in excess of 12 kgals, with usage block rate factors of 1.0, 1.5, and 2.0, 

respectively. 

We have a Memorandum of Understanding WOV) with the five Water Management 

Districts 0 s or Districts). A guideline of the five Districts is to set the base facility charges 

(BFCs) such tha! the utilities recover no more than 40 percent of the revenues to be generated 

ftom monthly service."* We comply with this guideline whenever po~sible."~ This 40 percent 

See Order No. PSC-l1-0544-PHO-WS, issued November 23,201 1, in this case. 

111 

Order No. PSG02-0593-FOF-WS, issued April 30,2002, in Docket No. 010503-WU, In re: Auulication for 

increase in water rates for Seven Springs svstem in Pasco Countv by Aloha Utilities. Inc.; and Order No. PSC-03- 

1440-FOF-WS.



PAGE 137 

BFC guideline is consistent with the results of the statewide Water Conservation Initiative’s 

(WCI) 6nal report, issued in April 2002.114 We have also cooperated with the WMDs regarding 

requests for conservation rate structures, implementing the inclining-block rate structure as our 

rate structure of choi~e.”~ 

Our staff, using its calculated revenue requirements for the respective water rate bands 

and stand-alone systems, evaluated the Utility’s request to change the residential usage blocks 

and usage block rate factors. This involved performing an analysis of Am’s billing data 

contained in MFR Schedule E-14, and evaluating the conservation signals that would be sent to 

the residential customer class. Based on this analysis, our staff believes that AUF’s requested 

usage blocks and proposed rate factors of 1.0, 1.5, and 2.0 are reasonable because these rate 

factors will allow our staff to conhue designing an effective water conserving rate structure. 

We agree. However, as will be discussed below, the Utility’s rate factor proposal does not 

reflect the methodology currently used by this Commission regarding the application of 

repression adjustments. As will also be discussed below, no repression is expted to occur in 

water Rate Band 2, and, as a result, no repression will be applied to that rate band in Table 24. 

Based on the above, the resulting usage block rate factors are: a) 1.0, 1.754 and 2.63 1 for usage 

blocks 1 through 3, respectively, for Rate Band 1; and b) 1.0, 1.5 and 2.0 for usage blocks 1 

through 3, respectively, for (the capped) Rate Band 2. 

Our traditional wastewater rate structure is the BFC/gallonage charge rate structure. In 

order to recognize the capital intensive nature of wastewater faciities, the wastewater BFC shall 

be set to recover 50 percent of the revenue requirement1l6 Residential billed consumption shall 

be capped at six kgals, and the general service kgal charge shall be 1.2 times the corresponding 

residential kgd charge. The residential and general service gallonage charge portions of both the 

Utility’s requested wastewater rate structure and our approved wastewater rate structure are 

consistent with our prior decisions.”’ 


Based on the foregoing, the appropriate rate stu~cture for the Utility’s residential water 

customers is a three-tiered inclining block rate structure with usage blocks for monthly 

‘I3 See Order Nos. PSC-09-0385-FOF-WS: PSC-024593-FOF-WS: PSC-94-1452-FOF-WU. issued November 28. 

19Kin Docket No. 940475-WU, In re: Au~licatim for rate in& in Martin County bv Hobe Sound Wafei 

Comuanv; PSC-014327-PAA-W, issued January 6, 2001, in Docket No. 000295-W, In re: Auulication for 

increase in water rates in Highlands County bv Placid Lakes Utilities, Inc.; and PSC-00-250O-PAA~WS, issued 

Decemba 26.2000, in Docket No. 000327-WS, In re: Amtication for staf€-assisted rate case in Putnam Countv by 

Buffalo BlufCUtilities. Inc. 

114 

1% 

’Is & Order Nos. PSC-094385-FOF-Ws; PSC-O34647-PAA-WS, issued May 28,2003, in Docket No. 020407- 

WS, In re: Auulication for rate increase in Polk County bv Cwress Iakes Utilities. Inc.; PSGOM248-PAA-WU; 

PSC-01-0327-PAA-WU; PSC42-0593-FOF-WS: and PSC-03-1440-FOF-WS. 

’I6 See Order Nos. PSC-114385-PAA-Ws; and~PSC-09-0101-PAA-WS, issued February 16,2009, in Docket No. 

070693-WS. In re: Auulication for increase in water and wastewater rates in Lake Countv bv Lake Utili@ Services. 

- InC. 

‘I7 See Order No. PSC-O7-0199-PAA-WS, issued March 5,2007, in Docket No. 060257-WS, In re: Auulication for 

increase in water and wastewater raks in Polk County bv Cwress Lakes Utilities, Inc.



PAGE 1 3 8 

consumption oE (a) 0-6 kgals, @) 6.001-12 gals, and (c) usage in excess of 12 kgals. The usage 

block rate factors for Rate Band 1 shall be 1.0, 1.754 and 2.631, respectively; and for the capped 

rate band 2 shall be 1.0, 1.5 and 2.0, respectively. The appropriate rate structure for the Utility's 

general service water customers is a continuation of the BFC/uniform gallonage charge rate 

structure, with the general service gallonage charge rate based on the average overall water rate 

per kgal. The BFC cost recovery allocation for the water systems Shall be set at 40 percent. 

The appropriate rate structure for the Utility's wastewater systems is a continuation of the 

current BFC/gallonage charge rate structure. Residential billed monthly consumption shall be 

capped at six kgals, and the general service kgal charge shall be 1.2 times the corresponding 

residential kgal charge. The BFC cost recovery allocation for the wastewater systems shall be 

set at 50 percent. 

C. Rate Consolidation for Water 



YES deferred to the position of OPC on this issue. In its brief, Pasco County consolidated its 

argument on the appropriate rate structure and appropriate rate consolidation for water and 

wastewater. Pasco County's consolidated argument was summanzed . in Section IX. B. Rate 

Structures, immediately preceding this section. Other &an Pasco County, no other party 

presented argument on this issue in their respective briefs. 


As listed in the Preh-g Order in this case, this is a fallout issue. Furthermore, as 

discussed in the Prehearing Order, a subsidy limit of $12.50, applicable only to the residential 

class, based on usage levels of seven kgals per month for the water systems and six kgals per 

month for the wastewater systems, has been stipulated to by the parties."' The Utility's current 

rate consolidation consists of seven rate groups: 1) four water rate bands (Rate Bands 1 through 

4) and 2) three stand-alone systems @mze Hi& Fairways and Peace River) q u i d subsequent 

to AUF's last rate case. An analysis of the monthly bills and percentage increases based on the 

approved billing determinants, revenue requirements, rate structure and current rate groupings is 

shown in Table 18 below. 

"8SeeOrderNo. PSC-11-0544-PHO-WS, issuedNovernber23,2011,inthis case.



PAGE 139 

Lime 

Nos. 

Table 18 - Comparative Analysis of Current Rate Groupings -Water”’ 

Based on Seven Kgals of Consumption per Month 

Current Current Current Current Breeze Peace 

Band1 Band2 Band3 Band4 - Hill Fairways River 

1 BFC $14.43 $18.71 $19.12 $22.37 $17.42 $24.89 $38.81 

- 

2 0-6kgals $2.75 $5.08 $4.88 $8.96 $12.09 $1.73 $6.32 

3 

6 

7 

- 

8= 

5-7 

- 

9= 

8f7 

Bill Incr - $$ $6.12 $12.75 $1.56 $20.17 $67.62 $18.98 $34.19 

Bill Incr - % 21.0% 28.4% 2.9% 28.7% 196.5% 95.0% 63.9% 

Leaving the current capband raie groupings and stand-alone systems in place results in no 

rate band or stand-alone system subsidizing another rate band or stand-alone system. As shown 

in Table 18, the monthly bill increases for the current capband systems range from 2.9 percent to 

28.7 percent. However, the monthly bill increases for the stand-alone systems of Breeze W, 

Fairways, and Peace River range would be 196.5 percent, 95.0 percent and 63.9 percenf 

respectively. We believe the increases for the three stand-alone systems are especially 

problematic, and any rate grouping shall address this concern. 

AUF has proposed fully consolidating alI of its current rate band and stand-alone systems 

into a single water system with a single set of rates applicable to all water customers. Our 

analysis of AUF’s consolidation request is shown in Table 19. 

1 19 

Based on the approved billing determinants, revenue requjrements, and rate structures. Also, within each tier, the 

gout shown is for each kgal consumed within that tier. 

May not calculate to amounts shown due to rounding.



PAGE 140 

Line 

Nos. 

__ 

1 

- 

2 

- 

3 

4 

- 

5 

BFC 

0-6kgals 

6+ - 12 kgals 

12+ kgals 

6 

Table 19 - Analysis of AWs Full Rate Consolidation Request- Water'" 

of Consu )tion per Monk '2~ current 

Current Breeze 

Band41 ml - Fair- 

Current 

&!.&z 

Bill Resulting 

From Am's 

RquestdFull 

Consolidation at 

Approved Rev. 

Requhment 


From Current 

Banding at 

Approved Rev. 

Requirement 

Bandl 

- - 

$18.82 

- ___ 

$4.76 

- 

$9.75 

- - 

$13.00 

~ 

$18.82 

$4.76 

$9.75 

$13.00 

- 

current 

Band3 

$18.82 

$4.76 

$9.75 

$13.00 

c 

($33.28) ($44.93) 

$70.22 $34.41 

$18.82 

$4.76 

$9.75 

$13.00 

PeaCe 

River 

$18.82 

$4.76 

$9.75 

$13.00 

$57.10 $57.10 $57.10 $57.10 $57.10 

6 

$35.27 $57.68 $55.81 $90.39 $102.03 $38.96 $87.67 

__ 

7= 

5-6 Max Subsidy $21.84 ($0.58) $1.30 

$18.15 ($30.56) 

__ 

+ 

Bill at Current 

8 Rates $29.15 $44.93 $5425 

$19.98 $53.48 

- 

~ - 

Line 

current Current current - Fair- Peace 

Nos. 

Bandl BandZ. 

Y43Y.s River 

- 

9= 

5-8 Bill Incr - $$ $27.95 $12.17 $2.85 ($13.12) $22.69 $37.12 $3.62 

- __ 

~ 

10 = 

918 Bill Incr - % 95.9% 27.1% 5.3% (18.7%) 66.0% 185.8% 6.8% 

- __ 

As shown above, current Rate Band 4 would see a decrease in its monthly water bill of 

approximately 18.7 percent. There are three rate groups whose resulting bills would increase 

between 5.3 percent (current Rate Baud 3) to 95.9 percent (current Rate Baud 1). The bills for 

I21 

Based on the approved billing determinants, revenue requkements, and nlte structures. Also, within each tier, the 

amount shown is for each kgal consumed within that tier. 

u2 

May not calculate to amounts shown due to rounding.

ORDER NO. PSC-12-01 02-FOF-WS 


PAGE 141 

the Breeze Hill and Peace River systems would increase by 66.0 percent and 6.8 percent, 

respectively. However, the Fairways system would see an increase of 185.8 percent, and, as 

discussed above, we believe any rate grouping should address increases of this magnitude. 

Furthermore, AUF’s proposed consolidation method would result in customers of the Fairways 

system paying a subsidy of $18.15, approximately 45 percent greater than the parties’ stipulated 

subsidy level of $12.50. The subsidy that would be paid by current Rate Band 1 is even more 

problematic. Current Rate Band 1 would be paying a subsidy of $21.84, approximately 75 

percent greater than the parties’ stipulated subsidy level of $12.50. Therefore, we find Am’s 

proposed rate consolidation methodology shall be rejected because: a) it results in exceeding the 

stipulated subsidy level for two of its current rate groups, and b) it does not result in a 

consolidation that mitigates problematic increases to current Rate Band 1, plus the Breeze Hill 

and Fairways systems. 

One way to mitigate the increases discussed above is to cap the rates at some threshold, 

thereby increasing the rates for the remaining rate bands and systems. As discussed in the case 

of Southern States Utilities. n/k/a Florida Water Services Comration v. Fla Public Service 

Commission, 714 So. 2d at 1053, Wothing inherent in the capband methodology runs afoul of 

the statute.. . . Although using stepped rates or “capbands” quires offsetting increases and does 

not spread offsets perfectly evenly among households paying less 9 maximum rates, such use 

need not lead to unfairly discriminatory rates.” Therefore, we analyzed three combinations of 

water system consolidation methodologies, including utilii a capband methodology that: a) 

combines the Fairways system with current Rate Band 1, and b) combines current Rate Bands 2, 

3, and 4 with the Breeze Hill and Peace River systems. This analysis results in the water rate 

consolidation methodology, as shown in Table 20 on the following page.



PAGE 142 

~ 

1 

2 

3 

4 

- 

~ 

5 

6 

7= 

5-6 

8 

- 

9= 

5-8 

__ 

10 = 

918 

- 

Approved Rate 

Band Groupings 

-+ 

BFC 

0-6kgak 

6+ - 12 kgals 

12+ kgals 


From Apprvd. 

Capband 

Consol. & 

Appved Rev. 

Required 


From Current 

Banding and 

Apprvd. Rev. 

Requjrement 

Max Subsidy 


Rates 

Bill Incr - $$ 

Bill Jncr - % 

Table 20 - Analvsis of Cr 

Band1 I Fairwavs 

and Rate Consolidation - Water'= 

Zonsumption per Month lZ4 

Current I Current I Current I Breeze I Peace 

I 

New Rate Band 1 

$18.57 

$3.33 

- 

$5.84 

$8.76 

$44.37 

- 

$35.27 

- 

$9.10 

$29.15 

$15.22 

- 

52.2% 

$18.57 

$3.33 

$5.84 

$8.76 

$44.37 

$38.96 

$5.41 

$19.98 

$24.39 

122.1% 

$19.17 

$6.55 

$9.83 

$13.10 

$68.30 

$57.68 

$10.62 

$44.93 

$23.37 

52.0% 

New Rate Band 2 = Capped Band 

$19.17 

$6.55 

- 

$9.83 

$13.10 

$68.30 

- 

$55.81 

$12.49 

$54.25 

___ 

$14.05 

25.9% 

$19.17 

$6.55 

$9.83 

$13.10 

$68.30 

$90.39 

($22.09) 

$70.22 

($1.92) 

(2.7%) 

$19:17 

$6.55 

$9.83 

$13.10 

$68.30 

$102.03 

($33.73) 

$34.41 

$33.89 

98.5% 

$19.17 

$6.55 

$9.83 

$13.10 

$68.30 

$87.67 

.($19.37) 

Based on the approved billing determinants, revenue requirements, and rate slxuctures, plus the $12.50 subsidy 

limit that was stipulated to by all parties. 

124 

May not calculate to amounts shown due to rounding. 

$53.48 

$14.82 

27.7%



PAGE 143 

As discussed in the analysis following Table 18, we believe any rate grouping should 

address the high percentage increases for the Breeze Hill, Fairways and Peace River systems. 

Our approved rate consolidation, while it does not mitigate the increase for the Fairways system, 

does reduce the percentage increase for the Breeze Hil system fiom 196.5 percent to 98.5 

percent, while the percentage increase for the Peace River system is reduced from 63.9 percent to 

27.7 percent. Furthermore, current Rate Band 4, which is the capped band containing the higher- 

cost systems, would also experience a decrease based on our approved consolidatio~~'~~ 

Although our rate consolidation did result in increases for the remaining rate bands or systems 

ranging hm 13.9 percent (the Fairways system) to 25.8 percent (current Rate Band I), we find 

these deviations are reasonable and necessary in order to mitigate the increases for the Breeze 

Hill and Peace River systems. Furthermore, no customer will pay more than the approved 

threshold of $68.30. 


Based on the foregoing, we find that the appropriate level of rate consolidation for the 

water systems is to: (1) combine the current water Rate Band 1 with the Fairways water system, 

into a single, new Rate Band 1; and (2) combine current Rate Bands 2,3, and 4 with the Breeze 

Hill and Peace River water system into a single, new Rate Band 2. The new Rate Band 2 shall 

be capped at the approved wafer rate cap threshold amount of $68.30 as discussed above. 

D. Rate. Consolidation for Wastewater 



YES deferred to the position of OPC on this issue. Also, while Pasco County did not specify a 

position on this issue in its brief, it did combine a discussion on rate structure and rate 

consolidation in its brief. A summary of that discussion is set out in Section E. B. Rate 

Structures of this Order. Other than Pasco County, no other party presented argument on this 

issue in their respective briefs. 


As Listed in the Prehearing Order in this case, rate consolidation is a fallout issue, and a 

subsidy limit of $12.50 bas been stipulated to by the parties!26 This subsidy limit applies only to 

the residential class, and is based upon usage levels of seven kgals per month for the water 

systems and six kgals per month for the wastewater systems. The Utility's current wastewater 

rate consolidation consists of four wastewater rate bands (residential Rate Bands 1 through 3, 

plus general service wastewater-only customers in Band 4) and three stand-alone systems 

(Breeze Hill, Fairways and Peace River). 

12( See Order No. PSC-09-0385-FOF-WS. 

'26GOrderNo. - PSC-lI-O544-PHO-WS, issuedNovember23,2011, inthis case.



PAGE 144 

An analysis of the monthly bills and percentage increases based on the approved billing 

determinants, revenue requirements, rate structure 

i; 

and current rate groupings is shown in Table 

21 below. 

Table 21 - - Comparative Analysis of Current Rate Groupings - Wastewater In 

Based on 6 Kgals of Consumption per Month 12* 

~ 

C-t 

Band4 

Line 

Current- Current 

Nos. - 1 Band2 

Fairwavs 

(GS MY) - 

1 BFC $19.00 $32.02 $64.86 $21.91 

$77.89 

2 

3 

4 

0-6 

kgals 

Bill at 

Current 

Banding 

and 

Recorn. 

Rev. 

WUirs 

ment 

Max 

Subsidy 

$6.42 

$57.51 

$0.00 

$8.04 

__ 

$80.25 

$0.00 

-I- 

+ 

$19.60 $12.41 $8.58 $9.65 $7.84 

$84.85 $103.36 $134.33 

$0.00 $0.00 $0.00 $0.00 $0.00 

- I 

Bill at 

Current 

Rates $45.63 

Bill Incr. 

- $$ $11.88 

Bill Incr. 

-% 26.0% 

$78.10 

$2.15 

__ 

2.8% 

$35.45 $82.25 

$142.97 

I 

As shown in Table 21, leaving the current capband rate groupings and stand-alone 

systems in place results in no rate band or stand-alone system subsidizing another rate band or 

system. Although the general service-only class (Rate Band 4) would see a decrease in their bill, 

all residential classes would experience increases of varying magnitude in their bills. For 

12 

May not calculate to totals due to romding 

Based on the approved b i deterininan& and revenue requirements. 

($8.64) 

(6.0%)



PAGE 145 

example, based on the current rate groupings, the monthly bill increases for current Rate Bands 1 

and 2, plus the Peace River system, would range from 2.8 percent to 26.0 percent. However, the 

increase for current Rate Band 3 would be 118.9 percent. The monthly bill increases for the 

Fairways and Breeze Hil systems are. equally concerning, at 139.4 percent and 144.7 percent, 

respectively. As with the water systems, we find the magnitude of these increases are especially 

problematic, and any rate grouping shall address these concerns. 

AUF has proposed fully consolidating all of these systems into a single wastewater 

system with a single set of rates applicable to all wastewater customers. Our analysis of Am’s 

consolidation request is shown in Table 22 below. 

Line 

Nos. 

- 

1 

$34.39 1 Fairwavs 

$34.39 $34.39 $34.39 

Table 22 - Analysis of Am’s Full Rate Consolidation Request - Wastewater’’’ 

Based on 6 Kgals of Consumption per Month 13’ 

Current 

Band3 

$34.39 

Breeze 

- Hill 

2 0-6kgals 

$8.65 $8.65 $8.65 I $8.65 $8.65 

3 

- 

4 

5= 

3 -4 

__ 

6 

- 

7= 

3-6 


From AUF‘s 

Requested Full 

Consolidation at 

Banding at Rev. 

Max Subsidy 


$86.27 $86.27 

$182.49 

($96.22) 

$83.35 $39.38 

$86.27 

$96.36 $134.33 

(0 10.09) ($48.06) 

Bill Incr - $$ I $40.64 I $8.17 $2.92 $46.89 $50.82 $4.02 

I I 

129 May not calculate to totals due to romding. 

130 

Based on approved billing determinants and revenue requirements. 

‘” Per Kgal. 

$142.97 

($56.70)



PAGE 146 

Bill Incr - % 

CWTEZlt 

Current Current Current Breeze PeaCe (GS 

Bandl Band2 Band3 Ha Fairways River only) 

89.1% 10.5% 3.5% 119.1% 143.4% 4.977 (39.7%) 

As shown in Table 22, Am’s requested full rate consolidation would result in customers 

of current Rate Band 4 (the general service-only rate baud) receiving a decrease of 

approXimately 39.7 percent. More importantly, current Rate Band 1 would pay a subsidy greater 

than the stipulated level of $12.50. TherefOK we reject An’s propased consolidation 

methodology. 

Asdiscussed above concerning Rate Consolidation for Water, one way to mitigate 

excessive rate increases is to cap the rates at some threshold, while not unduly increasing the 

rates for the re- rate bands. A tbird analysis was conducted lrtilizing a capband 

methodology rhat: (a) left current Rate Band 1 in= @) combined current Rate Bands 2 and 3 

with the Breeze Hill, Fairways and Peace River systems into anew, @Rate Band 2; and 3) 

made current Rate Band 4 (applicable to general service-only wastewater pviders) the new 

Rate Band 3. Furthenuore, when we apply the approved rate cap threshold and rate structure, 

along with the stipulated subsidy limit of $12.50, to the approved billing deterrmnan . 

tsand 

revenue requirements, we get the results as shown on Table 23 on the next page. 

&L&



PAGE 147 

Table 23 - Analvsis of Canband Rate Consolidation - Wastewaterm 

Current 

Band 1 

Fairways 

Rate Band 

New 

Groupings: Rate 

d Band 1 

New Rate Band 2 = Capped Band 

River 

1 BFC $23.11 $34.38 $34.38 $34.38 $3438 $34.38 

2 0 - 6 kgals $7.81 $8.86 $8.86 $8.86 $8.86 $8.86 

3 

- 

4 

BiIl Resulting 

From Appvd 

capband 

Consolidation 

and Approved 

Revenue 

Requirement 


Ban- and 

Approved 

Revenue 

Requirement 

$69.97 $87.53 $87.53 $87.53 $87.53 

$87.53 

$57.51 $80.25 $182.49 $96.36 $84.85 $103.36 

5= 

3-4 Max Subsidy $12.45 $7.28 ($94.96) ($8.83) $2.68 ($15.83) 

6 

- 

7= 

3-6 

- 

8= 7 

I6 


Rates 

Bill hcr - $$ 

Bill Incr - % 

$45.63 

$24.34 

$78.10 

$9.43 

$83.35 

$4.18 

$39.38 

$48.15 

$35.45 

$52.08 

$82.25 

$5.28 

53.3% 12.1% 5.0% 122.3% 146.9% 6.4% 

Current 

Band 4 

(GS MY) 

New 

Rate 

Band 3 

$77.89 

$7.84 

$134.33 

$134.33 

$0.00 

$142.97 

m May not calculate to totals due to rounding. 

133 

Based on approved billing determinants, revenue requirements, and rate structures, plus the $12.50 subsidy limit 

that was stipulated to by all parties. 

($8.64) 

(6.0%)



PAGE 148 

In order to fairly compare the effects of this capband methodology and resulting rate 

bands to the current rate bands and stand-alone systems, we analyzed the subsidy information 

contained on line 4 of Table 23. A review of this information indicates that subsidies paid by 

systems ranged h m a low of $2.68 (Fairways system) to a high of $12.45 (Rate Band 1). 

However, these subsidies were of benefit to the Breeze W, Peace River and current Rate Band 

3 customers, because they received subsidies of $8.83, $15.83 and $94.96, respectively. 

Therefore, we find the subsidies discussed above are reasonable and necessary in order to 

mitigate rate impacts of other customers. 


Therefore, based on the foregoing, we find that the appropriate level of rate consolidation 

for the residential wastewater systems is: (1) leave current Band 1 intacL and (2) combine current 

Rate Bands 2 and 3, plus the stand-alone systems of Breeze Hi& Fairways and Peace River, into 

a new capped Band 2. The new Rate Band 2 shall be capped at the approved wastewater rate cap 

threshold amount of $87.53. As shown above, the general service-only wastewater providers 

shall be in new Band 3. We do not consider rate cap thresholds for general service-only 

wastewater providers. 

E. Reuression Adiustments 

The appropriate repression adjustments for the water systems are shown in Table 24 

below. No repression adjustment is appropriate for the wastewater systems.



PAGE 149 


As listed in the Prehearing Order in this case, this is a fallout issue.134 The Utility’s rate 

factor proposal does not reflect the methodology currently used by this Commission where we do 

not apply repression adjustments to nondiscretionary consumption.135 ~ased on the above, this 

results in usage block rate factors of a) 1.0, 1.754, and 2.631 for usage blocks 1 through 3, 

respectively, for Rate Band 1; and b) 1.0, 1.5k, and 2.0 for usage blocks 1 through 3, 

respectively, for (the capped) Rate Band 2. 


Based on the approved billing determinants, revenue requirements, rate cap thresholds, 

rate structures, and consolidation for the respective water systems, the repression adjustments are 

shown in Table 24 above. Because wastewater rates are based on a cap of six kgals, which 

represents nondiscretionary consumption, there is no repression adjustment for the wastewater 

system. 

F. Water and Wastewater Rates 

The appropriate post-repression revenue requirement, excluding miscellaneous service 

charges, is $10,063,856 for the water system and $5,764,808 for the wastewater system. As 

discussed earlier, the appropriate rate structure for the water system’s residential class is a three- 

tier inclining block rate structure, with usage blocks for monthly consumption of a) 0-6 kgals, b) 

6.001-12 kgals, and 3) all usage in excess of 12 kgals. The approved usage block rate factors for 

Rate Bands 1 and 2 shall be: a) 1.0, 1.754 and 2.631, respectively for Rate Band 1, and b) 1.0, 

1.5 and 2.0, respectively, for Rate Band 2. The BFC cost recovery percentage shall be set at 40 

percent. The appropriate rate structure for the water system’s non-residential classes is the 

traditional BFC/unifonn gallonage charge rate struchm. As discussed above, a repression 

adjustment shall be made to the water systems as indiWed. Applying these findings to the 

approved pre-repression revenue requirements results in the final water rates contained in 

Schedule 5-A. These rates are designed to recover a post-repression revenue requirement of 

$10,063,856 forthe water system. 

The appropriate rate structure for the wastewater systems is a BFC/gallonage charge rate 

structure, with the general service gallonage charge set at 1.2 times the corresponding residential 

gallonage charge. The BFC cost recovery percentage shall be set at 50 percent. As discussed 

earlier, no repression adjustment shall be made to the wastewater systems. Applying these 

findings to the approved pre-repression revenue requirements result in the final wastewater rates 

contained in Schedule 5-B. These rates are designed to recover a revenue requirement of 

$5,764,808 for the wastewater system. 

Iy See Order No. PSC-I 1-0-4-PH0, issued November 23,201 1, in this case. 

13s 

See - 

Order No. PSC-03-114O-FOF-WS, issued December 22,2003, in Docket No. 020071-WS, In re: Auulication 

for rate increase in M o n Oranee. Pasco. Pinellas. and Seminole Counties bv Utilities Inc. of Florida; Order No. 

PSC-10-0117-PAA-WU, issued February 26,2010, in Docket No. 080695-WU, In re: Auulication for general rate 

increase bv Pemles Water Service Comumv ofFlorida. Inc.; and Order No. PSC-11-0385-PAA-WS.



PAGE 150 

The Utility shall file revised water and wastewater tariff sheets and a proposed customer 

notice to reflect the approved rates for the water and wastewater systems. The approved rates 

shall be effective for service rendered on or after the stamped approval date of the revised tariff 

sheets pursuant to Rule 25-30.475(1), F.AC. In addition, the approved rates shall not be 

hplemented una our staff has approved the proposed customer notice. The Utility shall 

provide proof of the date notice was given no less than ten days after the date of the notice. 

G. Are Rates Affordable 

1. Parties’ Armm ents 

AUF argues that the capband rate structure in the PAA Order and the uniform rate 

structure proposed by AUF produce affordable rates and benefit customers by ensuring that rates 

are kept as low as possible. Further, AUF notes that we have recognized those benefits by 

adopting uniform rates for electric and natural gas utilities in the state, and there is no legal 

impediment to the adoption of uniform rates for AUF’s customers. 

AUF argues that OPC’s efforts to inject a new and undefined “af€ordability” criterion are 

nothing more than an attempt to reduce AUF’s revenue requirement and divert our attention from 

the evidence suprting the need for rate relief, and are in contravention of the Florida Statutes 

and case law.13 AUF notes that pursuant to Section 367.081(1), F.S., we must fix water and 

wastewater utility rates that are just, reasonable, compensatory, and not unfairly discriminatory. 

Further, pursuant to the holdings in United Telephone Co. v. Mavo, 403 So. 2d 962,966 (Ha. 

1981); and Keystone Water Co. v. Bevis, 278 So. 2d 606 (Fla 1973), those rates must be 

established such that a utility is given the opportunity to mver its prudently incurred expenses 

and to earn a fair return on its investments. In detmmhhg a utility’s rates, AUF argues that we 

must consider whether rates are confiscatory and deprive a utility of a fair return on capital 

investment, and failure to allow a fair rate of return would violate the utility’s due process rights. 

- See Westwood Lake, Inc. v. Dade County, 264 So. 2d 7 (Fla 1972); and Gulf Power Co. v. 

Bevis, 289 So. 2d 401 (Fla 1974). 

Citing Southern States Utilities. &a Florida Wakr Services Cornoration v. Fla Public 

Service Commission, 714 So. 2d at 1053 (Southern States), AUF notes that the First District 

Court of Appeal (First DCA) “confirmed that ‘in the aggregate, rates and charges’ must assure a 

water and wastewater utility an opportunity to recover its ‘revenue requirement,’ which it 

described as ‘the cost of the service the utility provides, operating expenses as well as the cost of 

capital.”’ Moreover, in that same case, AUF argues that the First DCA accepted that “an 

‘affordabiJity’ criterion may be used to design a utility’s rate structure,” but that “plefore setting 

rates for separate classes of customers, the utility must establish and the PSC must approve a 

determination of the utility’s overall revenue requirements.” AUF argues that to the extent 

I36 

OPC and YES witnesses made anecdotal claims that AUF’s rates and services had devalued homes and 

businesses. However, AUF argues there is no showing in the record that Am’s rates and services have any 

correlation to home or business values, foreclosures, or occupancy rates.



PAGE 151 

that the rates of certain systems are capped at a certain level to address “aEordability” criterion, 

any resulting ‘‘shortfall” of revenues would need to be recovered from the remaining ratepayers 

of the utility to ensure the utility is afforded an opportunity to recover its “revenue requirement” 

as required by law. Thus, AUF concludes that if “affordability” is to be made part of this rate 

case, under Florida law, its pertinence must be confined to determining the appropriate design of 

AUF’s rate structure. 

AUF notes that Chapter 367, F.S., provides clear direction on how to establish rates for a 

water and wastewater utility, and that OPC‘s own witnesses concede that there is no 

“affordability” test in that Chapter or our rules for setting a utility’s revenue requirement as 

“affordable,” “affordability,” or “unaffordable.” Moreover, AUF argues thai the Le ‘slature has 

not included any such term in Chapter 367, despite knowing precisely how to do so. 1R 

AUF concludes its argument by stating that if it is deprived of its revenue quirement 

based on the novel, undefined and unsupported “affordability” criteria, it “would constitute an 

unconstitutional taking and a gross betrayal of the regulatory compact.” Further, AUF argues 

that “OPC’s attempts to inject a new ‘affordability’ criterion in rate. setting were properly 

rejected in the Prehearing Order, which struck OPC‘s proposed Issue 24 and included Issue 31A 

as a ‘rate structure’ issue.” See Prehearing Order, Order No. PSC-l1-0544-PHO-WS, pp. 81-83. 

OPC argues that pursuant to Sections 367.081 and 367.121, F.S., rates must be fair, just 

and reasonable, as well as compensatory and nondiscnmmat .. ory. OPC witness Poucher noted 

that the dictionary definition of compensatory includes the concept of providing payment 

equivalent to the value of the senice or product sold and.should consider the value of the 

product and services the customers are receiving h m AUF. Witness Poucher also test3ed that 

the abovenoted language included the concept that the resulting rates be affordable. 

OPC argues that the final rates approved must be such that they are affordable to 

customers and not cause an undue hardship to the customers. OPC witness Vandiver ‘”testifred 

that the Memam Webster dictionary defines affordable as ‘to manage to bear without serious 

detriment.”’ OPC argues that both we on our webpage, and AUF, through its witness Szczygiel, 

agree that investor-owned water utilities should provide quality and reliable water service at an 

affordable price to customers while earning a fair return for shareholders. 

137 

AUF notes the Legislature chose m Ch. 364, F.S., to make “Sordabii relevant to the development of 

telecommunications rates. But, even there, AUF argues that “affordabiiity” has never been used to deprive a 

telephone company of its right to mover its revenue requirement Rather, fedem1 and state law provide for a 

telewmmunications company offering below-cost mtes to low-income customers to receive subsidies fiom the 

Universal Service Fund thus making the compy ”whole.” In Florida, AUF states that no similar scheme even 

remotely exists for water and wastewater utilities. % Maddox v. State, 923 So. 2d 442,446-47 @la 2006) 

(stating that the Legislature’s use of &rent terms in different statutory sections indicates that diEerenf meanings 

were intended); and Leisure Resorts. Inc. v. Frank J. Roonev. Inc., 654 So. 2d 91 1, 914 @la 1995) (holding that 

where the Legislature has used a term in one section of a statute but omitted the term in another don, the court 

will not read the term into the sections where it was omitted).



PAGE 152 

OPC notes that its witness Vandiver testified the affordabiity of rates should be a critical 

component of our determination of the prudency of the Utility’s costs. OPC argues that “while 

an individual cost on its own may be. prudently incurred, that same cost may not be considered 

prudently incurred when e vald as part of a group of costs.” OPC argues that just because all 

individual costs appear to be prudent when taken alone does not mean that the end result must be 

prudent. OPC likens the process to the calculation of a state budget whereby individual 

expenditures may have been considered reasonable on their own, but where the end result would 

cause taxes (or rates) to go higher than Floridians can afford, then the Legislature (Commission) 

must go back and adjust those individual expenditures (expenses). 

OPC notes that both its witnesses Poucher and Vandiver testified that because of AUF’s 

high rates, customers could not afford to water their lawns, use water for hygienic purposes, pay 

their bills, remain in their homes, or maintain their standaxd of living. Witness Poucher also 

testi6ed that the concept of affordabiity in the telephone industry for universal service meant 

two standard deviations above and below the nationwide average. Both he and OPC witness 

Dismukes thought we should compare the typical monthly bills approved in the PAA Order with 

the rates of other water and wastewater companies operating in the same counties as shown in 

her Schedule 22. Witness Dismukes testified that of the 26 AUF water systems and 17 

wastewater systems she compared, 25 of AUF’s water system and all of the wastewater systems 

bad higher rates than the average of the remaining utilities’ rates in the same county. 

Citing Order No. 23186, issued July 13, 1990,”’ witness Vandiver noted that we have 

recognized that the regulatory framework can provide a disincentive to keep costs low and 

encourage utilities to practice what is known as “gold plating.” Witness Vandiver testified that 

we “should consider evaluating the utility’s operations to determine that the utility does not have 

just such a perverse incentive to continue to raise expense so that it may continue to increase its 

corporate revenues.” Witness Vandiver also noted that while staE witness Stallcup thought the 

rates were higher than would be expected, he nevertheless appeared to think or imply that this 

Commission was constrained by the statutory requirement that the rates be compensatory to give 

Am’s all of its requested expenses. Using witness Poucher’s definition of the term 

compensatory, she did not believe this was necessarily so. Further, although AUF witness 

Szczygiel claimed that the rate case is driven in large part by efforts to improve water quality and 

environmental compliance, witness Vandiver noted that a large portion of the requested revenue 

quirement increase is being driven by AS1 aliate costs, which costs have increased by over 

200 percent in less than two years. 

OPC concludes its argument by citing Order No. PSC-09-0385-FOF-WS, issued May 29, 

2009.13’ In that Order, we found that based on the respective system averages plus 1.96 standard 

deviations (which captures approximately 95 percent of the variation), the affordability limits 

were $65.25 for water systems and $82.25.for the wastewater systems. (Order No. PSC-09-0385- 

FOF-WS, p. 127) Noting that these rate caps (“affordability limits”) were determined less than 

131 

Docket No. 870247-TL, In re: Petition of AT&T Communications of the Southem states for Commission 

forbearance hm earnings redation and waiver of Rules 254.495(1) and 25-24.48OflYbL F.A.C.. for a trial 

gg&d 

‘39D~ketNo. 080121-WS, pp. 126-127.



PAGE 153 

two years ago, OPC states that it is reasonable to conclude that AUF's current increase request 

will only result in rates that furtlrer exceed these limits. 

Based on all the above, OPC notes that AUF's current rates show that AUF has some of 

the highest rates in the state without any increases. Moreover, OPC alleges that AUF bas 

overslated its rate base and net operating expenses which will lead to rates that are not f&, just, 

or reasonable. OPC concludes that AUF's buying of small, troubled systems, supposedly to 

bring better management and economies of scale, has not delivered these benefits to its 

customers. OPC contends that the overall rates requested by AUF are overstated, and there 

should be a total reduction of $2.3 million from the amount approved in the PAA Order. 

YES argues that its witness Harpin testified that an average customer of AUF residing at 

Arredondo Farms pays approximately $135-150 for AUF's water and wastewater services, and 

that this figure is $76 higher per month than an existing utility operator in the Gainesville 

market. YES further notes that lot rent at Arredondo Farms averages only $270, and lot rent 

with a mobile home averages $630 per month. YES notes that this results in the average resident 

paying water and wastewater bills to AUF which represent 55 percent of their lot rent or 21 

percent of their entire home rent, respectively. YES argues that because of these excessive rates, 

customers of AUF residing at Arredondo Farms are simply priced out of the housing market in 

Gainesville. 

YES argues that its witness Starlii presented a photograph of a home that was literally 

tom down and thrown into a dumpster when the owner could not afford to pay the AUF bills, 

and the home could not be moved due to its age. YES also notes that its witness Harpin testified 

that since the beginning of 201 1,59 residents have left Arredondo Farms and of those, 35, or 59 

percent, cited AUF's rates and service as the reason they vacated. 

YES argues that it is the only party and only property to put on evidence regarding the 

cost of AUF service compared to that of other utility providers in the same market and the 

harmful effects of AUF's exorbitant pricing in relation to the local housing market. Based on the 

rates already being dordable, YES argues that if there is any rate increase granted to AUF, 

we should reduce Amdondo Farm's rate tier so that the rates for Arredondo Farms will be more 

affordable as compared to the local housing market. YES also notes that AUF bas never 

performed any sort of market study of the affordability of its rates in the individual geographical 

regions, in spite. of the fact that AUF purports that its "Industry Mission" is to "provide quality 

and reliable water service at an affordable price to customers, while eaming a fair return for 

shareholders." 

Fdy, YES noted that AUF witness Szczygiel attempted to discredit YES witness 

Harpin's testimony. YES argues that AUF witness Szczygiel bad originally testified that witness 

Harpin's testimony was merely an attempt to harm AUF and seize its water and wastewater 

business at Arredondo Farms. However, upon cross-examination, Witness Szczygiel was 

compelled to change his rebuttal testimony to state that he has no knowledge of whether YES is



PAGE 154 

in the water or wastewater business and, therefore, his written rebuttal testimony in that regard 

was false. 

d. Pasco County 

Pasco County argues that numerous customers at the New Port Richey service hearing 

testified of their inability to pay AUF’s exorbitant rates. Pax0 County also notes that there were 

similar comments about the impact of the high rates on real estate in AUF’s areas, and the ability 

of properly owners to rent houses or having to drop rents due to AUF‘s rates. 

Pasco County argues that this results in a downward spiral where high rates lead to less 

Usage, and less usage means less revenue for the utility, which then leads to the need for another 

rate increase. Also, Pasco County argues that high rates can lead to customers not watering their 

lawns and plants, which causes ‘‘brown lawns and dead landscaping.” Pasco County argues that 

all the above depresses real estate values, increases vacancy rates, and causes even less usage 

and less revenues for the utility. Pasco County notes that AUF witness Szczygiel admitted that 

AUF’s high rates contributed to less water usage, and argues that poor water quality also 

contributes to less use. 

Finally, Pasco County notes that “the rates are not affordable because they are not in line 

with comparable systems, especially in Pasco County.” Pax0 County argues that the county 

rates are about 2.5 times less than AUF’s rates. As regards FGUA’S rates, Pasco County admits 

that some of that agency’s rates are comparable, but argues that FGUA is forced to maintain 

Commission approved rates when it buys a system formerly regulated by this Commission. 

The AG adopts the position of the OPC and adds that m y customers tesaed they 

could not afford this rate increase. Moreover, the AG argues that “[tlhis rate increase comes less 

than a year after the effective date of the last unprecedented increase granted AUF,” and “[iln 

these difficult economic circumstances, this kind of rate increase cannot be borne by the 

customers.” 


This issue was included by decision of the Prehearing Officer, following deletion of 

OPC’s requested Issue 24. OPC initially proposed that Issue 24 be included in the net operating 

income portion of the case, and requested that the issue read as follows: 

Are the totaJ operating expenses prudently incurred such that the resulting rates 

are affordable within the meaning and intent of fair, just, and reasonable pursuant 

to Sections 367.081 and 367.121, Florida Statutes? 

AUF objected to the inclusion of Issue 24, and the Prehearing Officer allowed parties to 

file briefs and present oral argument on the suitability of inclusion of the issue. 

After



PAGE 155 

deliberation, the Prehearing Officer determined that the issue as stated was neither needed nor 

appropriate, and issued his ruling as a part of the Prehearing Order.'" In his ruling in the 

Prehearing Order, the P rehw Officer stated in pertinent part: 

OPC's argument that the prudency of any expense is a position that OPC 

may take in each of the issues dealing with revenue requirements. . . . OPC and 

any party to this proceeding may challenge an expense item because that expense 

was imprudent. The prudence or imprudence of that expense may be argued by 

each party, and may include the appropxiateness of the individual expense. The 

parties may present such testimony or arguments as they deem relevant to the 

issue, including OPC's argument that affordability is a component of determining 

fak, just, reasonable, and not unduly dis CnminatOIy ' rates. Based on the testimony 

and subsequent briefs of the parties, the Commission determines the legitimate 

and prudent expense to be dowed in each individual issue and wil determine the 

revenue requirements for the utility. Therefore, as regarding expenses, I find that 

OPC's concerns may be addressed as the Commission comes to each of the 

requested expenses in dispute, and that, therefore, the issue of whether the 

expenses are legitimate and prudent is subsumed in the individual issues. 

Therefore, in consideration of the. above, and having reviewed the memoranda of 

OPC and AUF, the applicable case law, and statutes, I find that proposed Issue 24 

is neither required nor appropriate, and it shall be excluded and stricken. 

Moreover, the issue proposed by OPC, placed at the conclusion of the 

revenue requirements section, could jeopardize the ultimate decision of the 

Commission. Ifthe Commission were to first determine the revenue requirements 

and then reduce those requirements because it determined that the results were 

unaffordable, the Commission could run afoul of a long line of cases regarding 

ratesetting. Pursuant to the holdings in Gulf Power Comuaw v. Wilson; 

Bluefield Water Works & Imurovement Comuanv v. Public Service Commission 

of West Virginia, 262 U.S. 679 (1923); and Federal Power Commission v. Hope 

Natural Gas Co., 320 U.S. 591 (1944), a utility must be given an opportunity to 

recover its legitimate and prudent expenses, and a fair rate of return on its 

investment that is used and useful in the public service. 

Having found that Issue 24, as worded by OPC, should not be included, I 

do note that Commission statPs proposed rewording of the issue as a rate issue is 

appropriate. As noted in the Southem States case cited above, it appears that the 

appropriate place to address "affordabiility" is in the rate structure portion of the 

issues. Once revenue requirements have been established, the rate structure is 

determined Therefore, proposed Issue 24 is stricken, and an issue Concerning 

affordability shall be added. The issue concerning affordability is a rate structure 

issue and shall be numbered as Issue 31A and worded as follows: 

- See Order No. PSC-l1-0544-PHO-WS, issued November 23,201 1, in miS docket



PAGE 156 

Are the resulting rates affordable within the meaning of fair, just 

and reasonable pursuant to Sections 367.081 and 367.121, Florida 

Statutes?” 

Despite this ruling and the wording of the issue, it appears from OPC’s (and the other 

Intervenors) position statement and the conclusion of its argument that OPC’s basic request is, 

because OPC believes the rates contained in the PAA Order are ‘‘umfTordable,” we should make 

OPC‘s recommended adjustments and reduce AUF’s revenues by $2.3 million. We find that the 

ruling of the Prehearing Officer was correct and accurately stated the appropriate case law. 

Further, we believe OPC’s position on Issue 31A is simply an attempt at making Issue 3 1A fit its 

original Issue 24, which was appropriately stricken. It appears that OPC is advocakg for a 

method of reducing expenses on the back end without providing any legal, procedural, or even 

practical justifcation for the as yet undescribed process. 

Section 367.081(2)(a)l., F.S., sets forth our responsibility in rate setting, and states in 

pertinent part: 

The commission shall, either upon request or upon its own motion, fix rates which 

are just reasonable. comuensatory. and not unfairly discriminatorV . Ineverysuch 

proceeding, the commission shall consider the value and quality of the service and 

the cost of providing the senice, which &a.Jl include, but not be limited to, debt 

interest; the requirements of the utility for working capital, maintenance, 

depreciation, tax, and ouerating exuenses incurred in the operation of all umpem 

used and useful in the public service: and a fair return on the investment of the 

utility in urouertv used and useful in the public service . . . . 

(Emphasis added) 

Chapter 367, F.S., does not include a definition of ‘~ust,” “reasonable,” “compensatory,” 

or “unfairly discriminatory.” However, the courts have always read these terms broadly, and 

have recognized that we have broad discretion when setting rates. Also, Chapter 367, F.S., does 

not contain the term “affordable.” However, provisions in the statute do require that we consider 

the cost of providing service which includes operating expenses incurred in the operation of all 

property used and usefbl in the public service, as well as a fair return on the investment of the 

utility in property used and useful in the public service. 

In Section Vn. D. Affiliate Revenues and Charees of this Order, OPC contended that 

Am’s operating expenses were too high when compared to other Class C utilities. In that issue, 

we discussed why making an adjustment based on that comparison was improper. Now, in this 

issue., based in large part on a comparison of rates, OPC is requesting that the revenue 

requirement be reduced by $2.3 million. Based on essentially the same rationale expressed in the 

above-noted section, we find that making this adjustment would represent a departure from 

sound regulatory philosophy and be contrary to our practice and case law. Furthermore, we 

rejected a similar adjustment by an OPC witness in 1992 for a wastewater utility in Lee County,



PAGE 157 

wherein we found that it was inappropriate to make a reduction when the record did not support 

an argument that any specific [mate] chge is u~easonabie.'~~ 

Florida courts have made it clear that it would be improper to rely solely on OPC's 

comparative analysis to reduce the revenue requirement. In Sunshine Utilities of Central Florida 

v. Florida Public Service Commission, 624 So. 2d 306 (na 1st DCA 1993), the First DCA held 

that a comparative analysis of the salaries of other utility executives did not constitute 

competent, substantial evidencx to support a downward adjustment to the utility president's 

salary in a rate ease. The First DCA stated that: "[iln determining whether an executive's salary 

is reasonably compared to salaries paid to other company executives, the comparison musf at the 

minimum, be based on a showing of similar duties, activities, and responsibilities in the person 

receiving the salary."142 Similarly, OPC's rates comparison does not address the costs, expenses, 

investment, and specific problems of each of AUF's individual systems. We find that to reduce 

the revenue requirement based on these rate comparisons would ignore the actual costs incurred 

by AUF and violate fundamental principles of cost-of-service regulation. 

In all cases, we are charged with the responsibility to balance the interests of ratepayers 

and shareholders. Rates should be established to allow a utility the opportunity to recover its 

prudently incurred expenses and to earn a fair return on its investments, not to guarantee that it 

will do so.143 In determining a utility's rates by use of a prudent investments theory or original 

cost basis, we must consider whether rates are confiscatory and deprive a utility of a fair 

return.'" In rate cases, we are free to follow such methods as we may choose so long as the "end 

result" of such methods is the establishment of just and reasonable rates, and so long as such 

methods do not go so far astray thaf they violate Florida Statutes or run afoul of constitutional 

guarantees.145 

To this point, the U.S. Supreme Court (Court) has addressed utility claims of 

unconstitutiona~ takings in the rate ofretum regulation environment on several occasions.146 The 

Court has held in those cases that rates set so low as to deny an adequate rate of retum are 

confiscatory. The statutory principles for determining the appropriate rate of return for a 

regulated utility are set forth by the US. Supreme Court in its Bluefield decision.'47 This 

decision defines the fair and reasonable standards for determining a rate of return for regulated 

enterprises. Namely, this decision holds that the authorized return for a public utility should be 

111 

See Order No. PSC-93-128&FOF-SU, issued September 9, 1993, in Docket No. 920808-SU, In re: A~ulication 

for Rate Increase bv South Fort Mvers Division of Florida Cities Water Comuanv in Lee County. 

14 

In reaching its decision, the First DCA cited Metrouolitau Dade County Water & Wastewater Bd v. CommuniR 

Utilities Corn., 200 So. 2d 831,833 @la 3d DCA 1967). 

''' See United Teleuhone Co. v. Maw, 403 So. 2d 962,966 @la 1981); and Kevstone Water Co. v. Bevis, 278 So. 

Zd 606 @la. 1973). (The Court held that the rate base upon which a utility should be afforded an opportMity to earn 

reblm is not every dollar of investment made but only that investment in assets devoted to public service at the time 

rate base is auautified) 

See W&md La!&. Inc. v. Dade CounW2 264 So. 2d 7 (Fla 1972). 

145 - &General Teleuhone Comuany of Florida v. Carter. 115 So. 2d 554,559 (Fla 1959). 

&?., .P& Chicwo. Milwaukee & St Paul Railway Co. v. Minnesota, 134 U.S. 418,~lO S.Ct 462, 33 L.Ed 970 

(1890); Wilcox v. Consolidated Gas Co., 212 U.S. 19.29 S.Ct 192,53 L3.d. 382 (1909); Board of Public Utility 

Commissioners v. New York Teleuhone Co., 271 US. 23,46 S.Ct 363,70 L.Ed. 808 (1926). 

147 

See Bluefield Co. v. Public Service Commission. 262 U.S. 679,43 S.Ct 675,67 L.Ed 1176 (1923).



PAGE 158 

commensurate with returns on investments in other companies of comparable risk, sufficient to 

maintain the financial integrity of the company, and sufficient to maintain its ability to attract 

capital under reasonable terms. Moreover, the Florida Supreme Court held that a regulated 

public utility is entitled to eam a fair rate of return on capital investment and failure to allow a 

fair rate of return is a violation of due process rights.'48 Further, the Florida Supreme Court held 

that a utility is entitled to a fair rate of return on propem used or useful in public service, and 

rates which do not yield a fair rate of return are unjust, unreasonable, and contiscatory and their 

enforcement deprives a utility of due process.149 

We are unable to determine any previous docket in which we have taken the approach 

recommended by OPC (or the Intervenors). Also, when our staff asked in OPC witness 

Vandiver's deposition about this concept of affordable rates, she was unable to offer a 

methodology or a process in order to implement this request. Therefore, we find that OPC bas 

failed to suggest any mechanism by which we could use the concept of "affordability" of rates to 

retroactively reduce costs or expenses previously determined to be reasonable and prudent. We 

believe such action would result in rates that were by definition unjust and unreasonable, in that 

they would be noncompensatory, a term defined by case law in the water and wastewaier rate 

sening context 

Given that the accepted practice for determinin g rates is to first determine a revenue 

requirement, then rates are developed to meet that requirement, we are at a loss as to how to 

legally implement OPC's request. Once we have determined the reasonableness and prudency of 

an individual cost or expense, it is not clear by what method we could subsequently reduce that 

cost or expense to lower the overall revenue requirement by some arbitrary amount to achieve a 

desired rate level without violating due process requirements and accepted ratemaking practice 

and procedure. 

OPC's analogy between a rate case and the state's budget is fundamentally flawed, in that 

when formulating the state budget, the legislature has the abiity to reduce or eliminate 

discretionary spending. While we clearly have the ability to reduce discretionary costs of a 

utility, a utility must be given an opportunity to recover its legitimate and prudent expenses, and 

a .fair rate of return on its investment that is used and useful in the public service. Nowhere does 

Florida law provide this Commission with discretion to reduce or deny prudently incurred costs 

in order to reduce the resulting revenue requirement and thus the rate increase.150 

OPC's argument regarding the use of comparative rates is of interest, but provides no 

legal basis to grant the relief requested by OPC, that is, a post hoc reduction of costs or expenses 

to reduce an overall revenue requirement determined to be reasonable and prudent. While the 

'@ 

~~ 

See GulfPower Co. v. Bevis 289 So. 2d401 (Fla. 1974) 

Kevstone Water Co. v. Bevis. 218 So. 2d 606 (Fla. 1973). 

I50 - We note. that OPC (and the intervenors) are requesting that AUF's ROE be r e d d by 100 basis points for 

uns2tisfaaory quality of service. However, at the same time, it appears tbat OPC is requesting that some of the cos@ 

or investments m c d by AUF above a certain level should not be allowed because the rates will become 

nnaffordable. Tbk could put AUF in a "catch 22" position. AUF my need to incur additional costs or make further 

investments to improve quality of service, but these additional costs or inves!ment might not be allowed because the 

rates are deemed nnaffordable.



PAGE 159 

record does support OPC’s contention that AUF‘s rates are higher than the rates of most other 

water and wastewater utilities, we do not believe the record supports the unprecedented departure 

&om recognized ratemaking theory suggested by OPC. OPC has not demonstrated that based on 

the record before us, that we should determine the reasonableness and prudency of costs in 

individual issues, but then consider the resulting revenue requirement with an eye towards some 

arbitrary reduction simply because the result is “unaffordable.” It is through the rate structure 

that we balance the ideas of the appropriate level of subsidies versus the appropriate rate cap. 

Although the term “affordabiility” was used in Am’s last rate case, it was used in the context of 

what is the appropriate rate cap. When talking about affordabiity, we believe that the real issue 

is what is the appropriate rate cap (and appropriate degee of subsidization). 

We are not unsympathetic to the record evidence adduced through customer testimony at 

the ten service hearings and nine customer meetings. However, we believe we are bound by the 

requirements of law as set forth in Chapter 367, F.S., and established by legal precedent. As 

staff witness Stallcup testified, we find that the approved rates are as affordable as they can be 

given the requirements of Section 367.081, F.S., that rates be compensatory. Witness Stallcup 

testified that the Capband Rate Consolidation methodology was designed to help restrain 

excessively high stand-alone customer bills and make them more affordable. Further, using the 

Capband Rate Structure as opposed to the stand-alone rates that existed prior to the May 24, 

2011, Commission Agenda Coderence, witness Stallcup noted that Breeze W water customers 

would have their bills r edd &om $95.03 to $65.00, and wastewater customers of the old Rate 

Band 3 would bave their bills reduced from $204.66 to $91.55. Finally, witness Stallcup stated 

that use of the inclining block rate structure would enable customers to have lower total customer 

bills for all usage less than 12,000 gallons per month. 


Based on all the above, firsf we note there is no “affordabiity” test for setting a utility’s 

revenue requirement under Chapter 367, F.S. Therefore, based on the stipulated subsidy limit of 

$12.50, the approved rate cap thresholds, rate structures, rate consolidation and repression 

adjustments in prior issues, we find the resulting rates are as affordable as possible. Fmdy, this 

is a rate structure issue, and we believe it is not appropriate to use this issue to justify any 

decrease in the revenue requirement 

X. OTHER ISSUES 

A. Allowance for Funds Prudenth Invested Charges (AFPI) 

In the instant case, the Utility has requested AFPI charges for its Breeze Hill wastewater 

treatment plant This issue is a fall-out issue based on decisions related to non-used and usefbl 

plant, depreciation expense and property taxes, as well 8s the return on equity and overall cost of 

capital. 

An AFF’I charge is a mechanism designed to allow a utility to earn a fair rate of return on 

prudently constructed plant held for future use h m the future customers thai will be served by



PAGE 160 

that plant, in the form of a charge paid by those customers. This charge allows the recovery of 

Canying costs on the non-used and useful plant. Future customers bear their equitable share of 

the carrying costs related to the facilities being constructed This one-time connection charge is 

based on the number of ERCs and is applicable to all future customers who have not already 

prepaid a connection charge, CIAC charge, or customer advance. The charge is based on the 

date the future customers make some such prepayment or on the date the customer connects to 

the system, whichever comes first. 

We find it is prudent for AIJF to seek collection of AFPI charges from future customers. 

Therefore, consistent with OUI approved non-used and useful plant, depreciation expense and 

property taxes, as well as the return on equity and overall cost of capital, we calculate AFPI 

charges for the Breeze Hills wastewater treatment plant to be as shown in the table below. 

B. Customer Dmsits 

As a result of its requested uniform rates, AUF has requested uniform customer deposits 

for its rate. bands and stand-alone systems as well. Some of the Utility’s stand-alone systems do 

not presently have my customer deposits authorized in their tariffs. The discussion below 

addresses initial customer deposits and new or additional customer deposits. 


a Initial Customer Deposits 

The purpose of initial customer deposits is to establish credit with the utility. Rule 25- 

30.311(1), F.AC., sets out the criteria for establishment of credit for customers. The criteria 

include: (a) furnishing a satisfactory guarantor, @) paying a cash deposit, or (c) furnishing an



PAGE 161 

irrevocable letter of credit ffom a bank or a surety bond 

F.A.C., states: 

Specifically, Rule 25-30.311(1), 

Each company’s tariff shall contain their specific criteria for determining the 

amount of initial deposit. Each utility may require an applicant for service to 

satisfactorily establish credit, but such establishment of credit shall not relieve the 

customer eom complying with the utilities’ rules for prompt payment of bills. 

Further, Rule 25-30.311, F.AC., also provides guidelines for collecting, administering, 

and refunding customer deposits. Pursuant to Rule 25-30.31 1(5), F.A.C.: 

After a customer has established a satisfactory payment record and has had 

continuouS service for a period of 23 months, the utility shall refund the 

residential customer’s deposits . . ., providing the customer has not, in the 

preceding 12 months, (a) made more than one late payment of a bill (after the 

expiration of 20 days h m the date of mailing or delivery by the utility), (b) paid 

with check refused by a bank, (c) been disconnected for nonpayment, or at any 

time, (d) tampered with the meter, or (e) used service in a fiaudulent or 

unauthorized mer. 

In addition, the utility is required to pay interest on all customer deposits pursuant to Rule 25- 

30.31 1(4), F.A.C. 

We have recognized that customer deposits may be required to encourage payment of 

bills or mvery of past due amounts. Customer deposits are designed to minimize the exposure 

of bad debt expense for the utility, and ultimately the general body of ratepayers. Historically, 

we have set customer deposits equal to two month’s bills based on average consumption. For the 

initial deposif the amount is based on the average consumption per residential customer, 

calculated on the total residential usage divided by the number of residential bills. Therefore, the 

deposits a n calculated specifically by the customer class. 

The reason the deposit is based on a two-month average is that at the point in time the 

water meter is actually read by a meter reader, typically a full month of consumption has already 

passed. Consumption-based charges are based on past consumption. The consumption period is 

referred to as the service period, or the period of time h m the previous meter reading to the 

current meter reading. Typically, this period of time is approximately thirty days, if the utility 

has a monthly billing cycle. However, the cycle time may vary between 27 to 33 days. 

Once the meter is read, a bill is prepared and rendered. The time between the meter read 

and the bill preparation varies among utilities, but is usually between five to seven days. 

Payment is due twenty days h m the date the bill has been mailed or presented, consistent with 

Rule 25-30.335(4), F.A.C. Therefore, the actual payment is due approximately two months after 

the service is actually rendered. 

If payment is not received by the twentieth day, it is considered delinquent pursuant to 

Rule 25-30.335(4), F.A.C. At that point in time, the utility may begin disconnection of services.



PAGE 162 

Pursuant to Rule 25-30.320(2)(g), F.A.C., a utility may discontinue service for nonpayment of 

bills, provided the customer has been provided “at least 5 working days’ written notice,” md 

there has been a diligent attempt to have the customer comply. Thus, the service cannot be 

disconnected until well after two months subsequent to the bill being rendered. Also, an 

additional month of usage has already been provided to the delinquent customer, and presumably 

mother month’s bill has been issued by the time service can be disconnected. 

Not only is collecting a customer deposit to recover this two-month period of service 

consistent with ow past practice, it is also consistent with one of the fundamental princi als of 

1 2 

ratemaking-ensuring that the cost of providing service is recovered hm the cost causer. 

The methodology addressed above for calculating initial customer deposits is also 

consistent with the methodologies for natural gas utilities pursuant to Rule 25-7.083, F.AC., and 

electric utilities pursuaut to Rule 25-6.097, F.A.C. 

b. New or Additional Deuosits 

In the Utility’s application, AUF requested approval of new or additional customer 

deposits in its water and wastewater rate bands. Pursuant to Rule 25-30.31 10, F.A.C.: 

A utility may require, upon reasonable written notice of not less than 30 days, 

such request or notice Wig separate and apart h m any bill for service, a new 

deposit, where previously waived or returned, or an additional deposit, in order to 

secw payment of current bills; provided, however, that the total amount of the 

required deposit should not exceed an amount equal to the average actual charge 

for water andor wastewak service for two billing periods for the 12-month 

period immediately prior to the date of notice. In the event the customer has had 

service less than 12 months, then the utility shall base its new or additional 

deposit upon the average monthly billing available. 

AIthougb subsection 7 does not provide specific guidance as to when a utility collects a 

new or additional deposit, historically, utilities have applied this rule to current customers who 

would not qualify for a refund of a deposit pursuant to Rule 25-30.31 1(5), F.A.C. 

We agree with this industry-wide application and believe the utility may request a new or 

additional deposit when a current customer, in the preceding 12 months (a) made more than one 

late payment of a bill (after expiration of 20 days h m the date of mailii or delivery by the 

utility), @) paid with a check refused by a bank, (c) bas been disconnected for nonpayment, (d) 

has at any time tampered with the meter, or (e) used service in a hudulent or unauthorized 

manner. Therefore, current customers will not be charged a new or additional deposit unless 

they come under one of the preceding categories. If the utility decides to require a deposit fiom 

current customers, it must do so consistent with the conditions spelled out in its tariff. This new 

or additional deposit shall be calculated using the specific average actual water and/or 

I51 

~~ 

See order No. PSC-96-1147-FOF-WS, 

issued September 12,1996, in Docket No. 951258-WS, In re: A~~lication 

for rate increase in Brevard County by Florida Cities Water ComDauy Barefoot Bay Division).



PAGE 163 

wastewakr charges for two billing periods for the individual customer. Because the utility has 

this bUmg information specifically for its customers, the new or additional deposit shall be 

based on the customer’s actual usage over the preceding 12-month period. In comparison, the 

initial deposits requested by the utility are based on the average consumption of the rate class, 

since there is no billing history for new customers. 

The methodology of basing new or additional deposits on the actual average of two 

months is also consistent with the methodologies for determining customer deposits for natural 

gas utilities (Rule 25-7.083, F.A.C.), and electric utilities (Rule 25-6.097, FAC.). In response to 

a complaint over customer deposits between Sears/K-Mart and FPL, as stated in Order No. PSC- 

07-0813-TRF-WQ our staff initiated a Review of Customer Deposit Procedures for the five 

investor-owned electric utilities which was completed in March 2007.’” The purpose was to 

determine whether utilities were complying with Commission rules and whether the internal 

procedures were. fair and non-discriminato ry with respect to customer deposits. It also included 

an evaluation of new and additional deposits. The electric utilities use similar procedures in the 

determhtl ’on of whether new or additional deposits are necessary. This methodology is also 

consistent with other regulated water and wastewater utilities throughout the State of Florida 


In light of the above, we find that the appropriate customer deposits shall be the actual 

average two months bills of the approved rate structure and rates in tbis case. The Utility shall 

submit revised tariff sheets to include a provision for customer deposits, as discussed in OUT 

analysis above. Our staff shall be given authority to administratively approve these tariff sheets 

upon verification they are consistent with our decision. The revised tariff sheets shall be 

implemented on or after the stamped approval date on the revised tariff sheet, if no protest is 

filed and once the proposed customer notice has been approved by our staff as adequate, and the 

customers have received the approved notice. The notice may be combined with the notice for 

the approved service rates. 

C. Four-Year Reduction for Docket No. 080121-WS 

Section 367.0816, F.S., requires rates to be reduced immediately following the expiration 

of the four-year amortization period by the amount of the rate case expense previously included 

in the rates. In Docket No. 080121-WS, we approved rate case expense for the current water and 

wastewater rate bands, as well as the rate reduction to occur pursuant to Section 367.0816, F.S. 

The rates became effective April 1,2009, and the four-year rate case expense reduction will not 

occur until March 31,2013. As such, the previously-approved rate me expense for the current 

rate bands are embedded in the approved revenue requirements. Because we are consolidating 

the current rate bands and the stand-alone systems into three water and three wastewater rate 

bands, we believe it necessitates a recalculation of the four-year rate reduction. Also, the across- 

the-board rate decrease shall be calculated by taking the grossed-up rate case expense approved 

order No. PSC-07-0813-TRF-W, issued October 10,2007, in Docket No. 070366-W, In re: Auulication 

to amend water tariff to allow collection of customer dewsits bv O&S Water Comuanv. Inc.. p. 5.

' 



PAGE 164 

in the last case divided by the corresponding approve evenue requirema 

as illushated in the table immediately below. 

this instant case, 

Calculation Four-Year Rate Case Fkpeme. (R CE) Reddm for Docket No. 080121-WS 

Grossed- 

RAF up -Vd 

Anoss-the- 

AnnualRcEAm oa.E&q RcE RevmmRea. BoardDeae~ 

NewWaterBandl OldWaterBaudl I 0.955 $&&Q $2&%9B Lz% 

NewWaterBand2 OldWaterBand2 

Old Water Baud 3 

$36,565 

22,333 

0.955 

0.955 

$38,288 

23,386 

$1,474,868 

916,643 - 

Old Water Baud 4 

f&Q&Q 

0.955 &&X@ 5!52.l@ 

sE24222lE2.853.698 z&% 

NewWWBandI OldWWBand1 0.955 m 

NewWWBand2 OldWWBand2 

1 OldWWBand3 1 

$67,035 0.955 

0.955 

sZz28 

$70,194 

szUt.22s4.467.120 L&% 

NewWWBd3 OldWWBa~d4 1 g&& 0955 at222 liB2Jm LLLEY9


WCKETNO. 100330-WS 

PAGE 165 

314" 

1" 

3" 

4" 

6" 

8" 

1 0" 

8" 

IO" 

hidResiiBm 

3,000 gauons 

~,ooogallons 

L0,Ooo @om



PAGE 166 

New Rate 080121-ws 

Table 26 

New Rate 080121-WS New Rate 080121-WS 

WASTEWATER Band One (1) 4-Yr Reduction Band Two f21 4-Yr Reduction Band Three (3) 4-Yr Reduction 

Residential 

BFC - AU Meter 

Si 

$23.11 $0.77 $34.38 $0.61 $77.89 $0.67 

Kgal charge - 

6,000 Cap 

General Service 

518" x 314" 

314" 

1" 

1 1R" 

2" 

3" 

4" 

6" 

8" 

10" 

Charge 

Flat Rate Res. 

Valencia Terrace 

sunny Hills 

Zephyr Shores 

Jungle Den 

Lake Gibson Est 

Reuse per 

Sprinkler Head 

Residential Bills 

3,000 gaUons 

5,000 gaUons 

10,000 galIons 

[ww Gillonage Cap - 6,000 

gallons) 

$7.81 

$23.11 

$34.67 

$57.78 

$115.55 

$184.88 

$369.76 

$577.75 

$1,155.50 

$1,848.80 

$2,657.65 

$9.37 

$40.46 

NIA 

NIA 

NIA 

NIA 

NIA 

$46.54 

$62.16 

$69.91 

$0.26 

$0.77 

$1.15 

$1.91 

$3.83 

$6.12 

$12.25 

$19.14 

$3827 

$6123 

$88.02 

$0.3 1 

$1.34 

NIA 

NIA 

NIA 

NIA 

NIA 

$1.54 

$2.06 

$2.32 

$8.86 

$34.38 

$51.57 

$85.95 

$171.90 

$275.04 

$550.08 

$859.50 

$1,719.00 

$2,750.40 

$2,750.40 

$10.63 

NIA 

$60.01 

$50.00 

$86.07 

$180.52 

NIA 

$60.96 

$78.68 

$87.54 

$0.16 

$0.61 

$0.91 

$1.52 

$3.03 

$4.85 

$9.71 

$15.17 

$30.33 

$48.53 

$48.53 

$0.19 

NIA 

$1.06 

$0.88 

$1.52 

$3.19 

NIA 

$1.08 

$1.39 

$1.54 

$7.84 

$77.89 

$116.84 

$194.73 

$389.45 

$623.12 

$12464624 

$1,947.25 

$3,894.50 

$6231.20 

$8951.35 

$9.41 

NfA 

NIA 

NIA 

NIA 

NIA 

$0.49 

$101.41 

$117.09 

$124.93 

[l) Rate Band 1 consists of Old Rate Band 1 only. 

[2) Rate Band 2 mists of Old Rate Bands 2 and 3, and the Breeze. Hiu, Fainvays, and Peace Rivm System. 

!3) Rate Band 3 consists of Old Rate Band 4 fGS 

$0.07 

$0.67 

$1.01 

$1.68 

$336 

$5.38 

$10.75 

$16.80 

$33.61 

$53.77 

$71.29 

$0.08 

NIA 

NIA 

NIA 

NIA 

NIA 

$0.00 

$0.88 

$1.01 

$1.08



PAGE 167 

AUF shall file revised tariff sheets for each system to reflect the approved rates no later 

than one month prior to the actual date of the required rate reduction. The Utility shall also be 

required to Ne a proposed customer notice for each system setting forth the lower rates and the 

reason for the reduction with the revised tariff. The approved rates shall be effective for service 

rendered on or after the stamped approval date of the revised tariff sheets pursuant to Rule 25- 

30.475(1), F.A.C. The rates shall not be implemented until our staff has approved the proposed 

customer notice, and the notice has been received by the customers. The Utility shall provide 

proof of the date notices were given within ten days of the date the notices were sent. 

If the Utility files this reduction in conjunction with a price index or pass-through rate 

adjustment, separate data shall be filed for the price index ador pass-through increase or 

decrease, and for the reduction in the rates due to the amortized rate case expens. The 

appropriate reduction was calculated by taking the annual amount of rate case expense and the 

return on the provision included in working capital allowance by system as well as grossed-up 

for regulatory assessment fees. 

D. Interim Refund Calculation 

By Order No. PSC-10-0707-FOF-WS, we approved interim water and wastewater rates 

subject to refund, pursuant to Section 367.082, F.S. In this proceeding, the test period for 

establishment of interim rates was the historical &month average period ended April 30,2010. 

The approved interim rates did not include any provisions for pro forma operating expenses or 

plant The interim increase was designed to allow recovery of actual interest costs, and the floor 

of the last authorized range for equity earnings. 

Consistent with Section 367.082(4), F.S., any refimd must be calculated to reduce the rate 

of return of the Utility during the pendency of the proceeding to the same level within the range 

of the newly authorized rate of return. Adjustments made in the rate case test period that do not 

relate to the period that interim rates are in effect sball be removed. To establish the proper 

refmd amount, we calculated a revised revenue requirement for the interim period using the 

same data used to establish final rates. Rate case expense was excluded because it was not an 

actual expense during the interim collection period. Applying the requirements of the interim 

statute, we find that interim refunds are required for certain rate bands and stand-alone systems 

because the calculated interim period revenue requirement was less than the interim revenue 

quirement approved in Order No. PSC-10-0707-FOF-WS. Our calculations are shown on 

Table 27 below.



PAGE 168 

E. PAA Refund Calculation 

By Order No. PSC-ll-0336-PCO-WS, we approved the implementation of PAA water 

and wastewater rates subject to refund, pursuant to Section 367.081(8), F.S. Consistent with 

Section 367.082(4), F.S., any refund must be calculated to reduce the rate of return of the Utility 

during the pendency of the proceeding to the same level witbin the range of the newly authorized 

rate of return. Adjustments made in this period that do not relate to the period that PAA rates are 

in effect shall be removed. To establish the proper refund amount, our staff calculated a revised 

revenue requirement for this period using the same data used to establish h d rates. The 

incremental rate case expense above that which was embedded in PAA rates was excluded 

because it was not an actual expense during the collection period. Applying the requirements of 

the interim statute, we find that PAA rate refunds are required for certain rate bands and stand- 

alone systems because the calculated period revenue requirement was less than the PAA revenue 

requirement approved in Order No. PSC-11-0336-PCO-WS. Our calculations are shown in the 

table below.

I 

I ORDERNO. PSC-12-0102-FOF-WS 


PAGE 169 

F. Four-Year Rate Reduction (this docket) 

Section 367.0816, F.S., requires rates to be reduced immediately following the expiration 

of the four-year amortization period by the amount of the rate case expense previously included 

in the rates. The reduction wil reflect the removal of total company revenues of $293,508 for 

water and $128,356 for wastewater associated wifh the amortization of rate case expense and the 

return on the provision included in working capital, as well as the gross-up for regulatory 

assessment fees. The reduction in revenues will result in the rate reduction shown on Schedules 

5-A and 5-B. 

OPC has requested that amortization of the rate case expense incurred in the instant case 

not begin until after the amortization of the rate case expense h m the 2008 case has been fully 

recovered. As noted above, this will occur after March 31,2013. However, OPC was unable to 

identify any statutory or rule support for this treatment. While we are sympathetic to the parties' 

concerns over the "pancaking" of rate case expense, there is no justification or legal basis to 

implement OPC's recommended treatment. Therefore, this request is denied. 

AUF shall file revised tariff sheets to reflect the approved rates no later than one month 

prior to the actual date of the required rate reduction. The Utility shall also file a proposed 

customer notice setting forth the lower rates and the reason for the reduction with the revised 

tariffs. The approved rates shall be effective for service rendered on or after the stamped



PAGE 170 

approval date of the revised tariff sheets pursuant to Rule 25-40.475(1), F.A.C. The rates shall 

not be implemented until OUT staff has approved the proposed customer notice, and the notice has 

been received by the customers. The Utility shall provide proof of the date notices were given 

within ten days of the date the notices were sent. 

If the Utility files this reduction in conjunction with a price index or pass-througb rate 

adjustment, separate data shall be filed for the price index and/or pass-through increase or 

decrease, and for the reduction in the rates due to the amortized rate case. expense. The 

appropriate reduction was calculated by taking the annual amount of rate. case expense and the 

return on the provision included in working capital allowance, as well as grossed-up for RAFs. 

G. Deferred Interim Revenues 

In order to minimke the impact of the interim increase on its customers, AUF proposed 

to defer recovery of a portion of its entitled interim rate relief. By Order No. PSC-10-0707-FOF- 

WS, we approved Am's request to recognize the difference between capped and uncapped 

interim rates over the interim collection period as a regulatory asset to be recovered over a two- 

year period once kal rates are determined. A regulatory asset typically involves a cost incurred 

by a regulated utility that would normally be expensed currently but for an action by the 

regulator or legislature to defer the cost as an asset on the balance sheet. This allows a utility to 

amortize the regulatory asset over a period greater than one year. Further, the Utility stated that 

it would neither seek to recover interest on this deferred recovery, nor have this amouat included 

in working capital.153 

Consistent with the approved interim refunds, the approved rate bands and stand-alone 

system addressed in previous issues, and an estimated cessation date for the intd collection 

period of three weeks after the final rate order is issued in this case, we find that total regulatory 

assets for water and wastewater are $680,222 and $370,331, respectively. Accordingly, the total 

annual amortization amount for water and wastewater is $228,294 and $124,289, respectively. 

This is consistent with our decision in the Utility's last case regarding regulatory assets generated 

hm the deferral of interim revenues the Utility was entitled to collect but elected to defer.'54 

Each rate band or stand-alone system that generated the regulatory assets shall receive the 

reduction in annual amortization of their respective regulatory assets. Annual amortidon for 

the applicable systems are reflected on the respective Schedule 4-C. Fdy, upon the expktfion 

of the two-year amortization period, the respective systems' rates shall be reduced across-theboard 

to remove the respective grossed-up annual amortization of the regulatory assets. 

The Utility shall file revised tariffs and a proposed customer notice setting forth the lower 

rates and the reason for the reduction no later than 30 days prior to the actual date of the required 

rate reduction. The approved rates shall be effective for service rendered on or after the stamped 

approval date of the revised tariff sheets pursuant to Rule 25-40.475(1), F.A.C. The rates shall 

not be implemented until OUT staff has approved the proposed customer notice. AUF shall 

provide proof of the date notice was given within ten days of the date the notice were sent. 

153 

See Order No. PSG104707-FOF-WS, p. 4. 

'"GOrder - No. PSC-09-0385-FOF-WS, pp. 153-155.



PAGE 171 

If the Utility files this reduction in conjunction with a price index or pass-through rate 

adjustment, separate data shall be filed for the price index andor pass-through increase or 

decrease, and for the reduction in the rates due to the amortized regulatory asset 

Based on the foregoing, it is 

ORDERED by the Florida Public Service Commission that the water and wastewater 

increase application of Aqua Utilities Florida, Inc., is granted in part and denied in part as set 

fortb in the body of this Order. It is further 

ORDERED that each of the findings made in the body of this Order are hereby approved 

in every respect. It is further 

ORDERED that all matters contained in the appendix, attachments and schedules 

appended hereto are incorporated herein by reference. It is further 

ORDERED that Aqua Utilities Florida, Inc. is authorized to charge the new rates and 

charges as set forth in the body of this Order and the attachments and schedules attached hereto. 

It is further 

ORDERED that Aqua Utilities Florida, Inc. shall file revised water and wastewater tariff 

sheets and a proposed customer notice to reflect the approved water and wastewater rates. It is 

further 

ORDERED that the approved rates shall be effective for service rendered on or after the 

stamped approval date of the revised tariff sheets pursuant to Rule 25-30.475(1), F.A.C. It is 

further 

ORDERED that the approved water and wastewater rates shall not be implemented until 

our staff has approved the proposed customer notice, and Aqua Utilities Florida, Inc. shall 

provide proof of the date notice was given no less than ten days after the date of the notice. It is 

further 

ORDERED that for the three pro forma projects that were not completed as of the end of 

the technical testimony, Aqua Utilities Florida, Inc. shall provide certification from the 

Department of Environmental Protection as to the completion date or date the projects were 

placed into service. It is further 

ORDERED that Aqua Utilities Florida, Inc. shall file a proposed customer notice to 

reflect the Commission-approved customer deposits. It is further 

ORDERED that the approved charges for customer deposits shall be effective for service 

rendered on or after the stamped approval date of the tariff, pursuant to Rule 25-30.475(1), 

F.A.C., provided the notice has been approved by e. It is further



PAGE 172 

ORDERED that within ten days of the date of the order, Aqua Utilities Florida, Inc. shall 

provide notice of the tariff changes to all customers. It is M er 

ORDERED that Aqua Utilities Florida, Inc. shall provide proof the customers have 

received notice within ten days after the date the notice was sent It is further 

ORDERED that this notice may be combined with the notice for the approved service 

rates. Itisfixther 

ORDERED that the Utility shall refund the excessive water and wastewater interim rates 

collected for the systems indicated in Table 27 in the body of this Order. It is further 

ORDERED that the Utility shall refund the excessive water and wastewater rates 

collected for having implemented the PAA rates €or the systems indicated in Table 28 in the 

body of this Order. It is further 

ORDERED that both these refunds shall be made with interest in accordance with Rule 

25-30.360(4), F.A.C. It is further 

ORDERED that the Utility shall submit proper refund reports purmant to Rule 25- 

30.360(7), F.A.C. The Utility shall ?xat any unclaimed refunds as CIAC pursuant to Rule 25- 

30.360(8), F.A.C. It is further 

ORDERED that the corporate undertaking shall be released upn our staffs verification 

that all the required refunds have been made. It is further 

ORDERED that the water and wastewater rates shall be reduced as shown on Tables 25 

and 26, respectively, for the rate case expense approved in Docket No. 080121-WS. It is fixthe1 

ORDERED that the rate reductions for the rate case expense in Docket No. 080121-WS 

shallbeeffectiveasofMarch31,2013. Itis further 

ORDERED that the water and wastewater rates shall be reduced as shown on Schedules 

Nos. 5-A and 5-B for each system to remove $293,508 of water and $128,356 of wastewater rate 

case expense incurred in this docket, grossed up for regulatory assessment fees. It is further 

ORDERED that the decrease in rates shall become effective immediately foUoWing the 

expiration of the four-year rate case expense recovery period in this docket. It is further 

ORDERED that the individual systems that generated the regulatory assets shall be 

entitled to receive the benefit of the annual amortization of their respective regulatory assets and 

that upon the expiration of the two-year amorbtion period, the respective systems’ rates shall 

be reduced across-the-board to remove the grossed-up annual amortization of the regulatory 

assets. It is M e r



PAGE 173 

ORDERED that for all three reductions, the Utility shall file revised tariff sheets and a 

proposed customer notice setting forth the lower rates and the reason for the reduction to reflect 

the approved reduction in rates no later than 30 days prior to the actual date of the mquired rate 

reduction. It is further 

ORDERED that the approved reductions in rates shall be effective for service rendered 

on or after the stamped approval date of the revised tariff sheets pursuant to Rule 25-40.475(1), 

F.A.C. It is further 

ORDERED that the reductions in rates shall not be implemented until &has approved 

the proposed customer notice. The Utility shalI provide proof of the date notice was given no 

less than ten days after the date of the notice. It is M e r 

ORDERED that if the Utility files these reductions in conjunction with a price index or 

pass-through rate adjustment, separate data shall be filed for the price index and/or pass-through 

increase or decrease, and for the reduction in the rates due to the amortized rate we expense. It 

is further 

ORDERED that the Utility shall be allowed to charge the Allowance for Funds prudently 

Invested charge for the Breeze Hill wastewater treatment plant as shown on the table set out in 

the body of this Order. It is M er 

ORDERED that Aqua Utilities Florida, Inc., shall submit: (1) the four monthly reports 

noted in the body of this order, (2) all warning letters, consent orders, and notices of violation; 

and (3) the Precautionary Boil Water Notice reports on a quarterly basis for a period of one year 

from the date of this Final Order as set forth in the body of this order. It is further 

ORDERED that if this Final Order is not appealed, this docket shall be closed upon our 

stafPs approval of the tariffs, verification of the required refunds, and the expiration of the time 

for sling an appeal.



PAGE 174 

By ORDER of the Florida Public Service Commission this 5th day of March, 2012. 

1st Ann Cole 

ANN COLE 

Commission Clerk 



Tallahassee, Florida 32399 

(850) 413-6770 

www.floridapsc.com 

Copies furnished: A copy of this document is 

provided to the parties of record at the time of 

issuance and, ifapplicable, interested persons. 

NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW 

The Florida Public Service Commission is required by Section 120.569(1), Florida 

Statutes, to notify parties of any administrative hearing or judicial review of Commission orders 

that is available under Sections 120.57 or 120.68, Florida Statutes, as well as the procedures and 

time limits that apply. This notice should not be construed to mean all requests for an 

administrative hearing or judicial review will be granted or result in the relief sought. 

Any party advenely affected by the Commission's hal action in this matter may request: 

1) reconsideration of the decision by filing a motion for reconsideration with the Office of 

Commission Clerk, 2540 Shumard Oak Boulevard, Tallahassee, Florida 32399-0850, within 

lifteen (15) days of the issuance of this order in the form prescribed by Rule 25-22.060, Florida 

Administrative Code; or 2) judicial review by the Florida Supreme Court in the case of an 

electric, gas or telephone utility or the First District Court of Appeal in the case of a water and/or 

wastewater utility by sling a notice of appeal with the Office of Commission Clerk, and sling a 

copy of the notice of appeal and the sli fee with the appropriate court. This filing must be 

completed within thirty (30) days &r the issuance of this order, pursuant to Rule 9.110, Florida 

Rules of Appellate Procedure. The notice of appeal must be in the form specified in Rule 

9.900(a), Florida Rules of Appellate Procedure.



PAGE 175 

Amendix 

A. Issues Not in Dispute Deemed Stipulated Pursuant to S. 120.80~13)fi). Florida Statutes 

(The issues are numbered as designated in the staff proposed agency action recommendation 

dated May 12, 2011, and approved by this Commission at the May 24, 2011 Commission 

Conference - Order No. PSC-I 1-0256-PAA-WS). 

RATE BASE 

PAA ISSUE 2: Should the audit adjustments to rate base and operating expenses to which 

the Utility agrees, be made? 

STIPULATION 

Based on audit adjustments agreed to by the Utility, land and working 

capital be increased by $160,093 and $79,006, respectively, and operation 

& maintenance (O&w expenses shall be decreased by $255,390. 

Specifically, the following adjustments to rate base and O&M expenses 

shall be made. 

PAA ISSUE 3: Should adjustments be made to the Utility’s pro forma plant additions? 

STIPULATION: The Utility’s requested PAA pro forma plant addittons shall be decreased 

by $137,060 for water and by $565,288 for wastewater. Accordingly, 

accumulated depreciation shall be increased by $102,867 for water and 

$85,016 for wastewater, and depreciation expense shall be decreased by 

$21,698 for water and $36,524 for wastewater. Moreover, the Utility’s



PAGE 176 

I 

property taxes shall be decreased by $6,399 for water and $11,972 for 

wastewater. The specific rate band and system adjustments are set forb 

below.



PAGE 177



PAGE 178 

PAA ISSUE 4: Do any water systems have excessive unaccounted for water, and, if so, 

what adjustments are necessary? 

STIPULATION: 

The percentages for excessive unaccounted for water @UW) for each 

walm rate band and stand-alone system are shown below. 

Rate Band/System Composite EUW % 

Rate Band 1 1.05 




Breeze Hill 6.09 

Peace River 11.47 

The adjustment to Purchased Power, Chemicals, and Purchased Water 

expenses for Rate Band 4 is $96. 

PAA ISSUE 5: What are the appropriate used and useful percentages for water treatment 

and related facilities of each water system? 

STIPULATION 

The following table reflects the U&U percentages for the stipulated water 

treatment and related facilities of each system listed below:

4 i 



PAGE 179 

PAA ISSUE 6: 

STIPULATION 

PAA ISSUE 7: 

STIPULATION: 

Sbcrest 

Stone Mountain 

summitchase 

SUnnyHills 

Taugerine 

The Woods 

valencia Terrace 

wootens 

100 

100 

100 

91 

100 

100 

100 

100 

What are the appropriate used and useful percentages for the storage 

tanbs? 

AU of the AUF storage tanks shall be considered 100 percent U&U. 

What are the appropriate used and useful percentages for water 

distribution systems? 


distribution of each system list below



PAGE 180 

PAA ISSUE 8: 

STIPULATION 

System I WDist.System% 

Arredondo Farms I 88 

48 Estates 85 

Carlton V i e I 47 

East Lake Harris/Friendly Center I 100 

PommPark 

Pmnna Pa& 

Quail Ridge 

summitchase 

Tangerine 

Tomoka View 


Zephyr Shores 

WBandiSystem 

RateBand 1 

Rate Band 2 

Rate Band 3 

Rate Band 4 

Brecze Hill 

Peace River 

51 

100 

100 

60 

100 

100 

100 

I -21 I 

Do any wastewater systems have excessive infiltration an- inflow an 

so, what adjustments are necessary? 

composite Excessive I&I % 

0.00 

2.18 

25.72 

4.53 

65.40 

19.73



PAGE 181 

PAA ISSUE 9: 

STIPULATION 

The adjustments to Purchased Power, Chemicals, and Purchased 

Wastewater expenses for Rate Band 2, Rate Band 3, and Breeze Hill are 

($994), ($22,606), and ($5,098), respectively. 

What are the appropriate used and useful percentages for wastewater 

treafment and related facilities of each wastewaier system? 

The following table reflects the U&U percentages for the stipulated 

wastewater treatment and related facilities of each system listed below 

JasmineLakes 

PalmTerrace 

Park Manor 

PAAISSUE 1 0 What are the appropriate used and useful percentages for wastewater 

collection systems? 

STIPULATION: 

PAA ISSUE 11: 

STIPULATION 

The following table reflects the U&U percentages for the stipulated 

wastewater collection of each system listed below: 

Should any further adjustment be made to other Deferred Debits? 

Other Deferred Debits shall be increased further by $14,042 for the 

jurisdictional systems to reflect the appropriate 13-month average balance 

as shown in the table below:



PAGE 182 

PAA ISSUE 12: 

STIPULATION 

Should any adjustments be made to Accrued Taxes? 

Consistent with the Commission’s decision in the Utility’s last rate case, 

Accrued Taxes shall be reduced by $1,917,134 on a total company basis to 

normalize the test year Accrued Tax balance for purposes of setting rates. 

The reduction of $1,917,134 represents the total for AUF. The 

Commission only has jurisdiction over 60.17 percent of the total AUF 

systems. This represents a reduction of $1,153,548 for the jurisdictional 

systems as shown in the table below:

COST OF CAPITAL 

PAA ISSUE 16: 

STIPULATION 

PAA ISSUE 18 

STIPULATION 

PAA ISSUE 19: 

STIPULATION 

NET OPERATING INCOME 

Fairways - Water 

Peace-WaSmvrda 

(11,701) 

What is the appropriate capital structure to use for rate setting purposes? 

The appropriate capiM st~ucture to use for rate setting purposes is based 

on the capital structure of AUF. 

what are the appropriate cost rates for short and long-tenn debt for the test 

Year? 

There is no short-term debt in AUF's capital smcture. The appmprkte 

cost rate for long-term debt for the test year is 5.10 percent 

What is the appropriate retumon equity (ROE) for the test year? 

The appropriate ROE shall be as set out in the Commission-approved 

levemge formula 

PAA ISSUE 21: Should any adjustments be made to disallow fines and penalties assessed 

to the Utility? 

STIPULATION 

(4,792) 

Total: ($1,153,548) 

0&M expenses shall be reduced by $12,767 to move expenses related to 

fines and @ties. The specific adjustments to each rate band and system 

are shown in the table below:



PAGE 184 

Peace River - water 

Peace River - Wastewater 

PAA ISSUE 23: Should any adjustments be made to Sludge Hauling, Contractual Services 

-Accounting, and Contractual Services - Legal expenses? 

STIPULATION: 

0&M expenses shalI be reduced by $29,949 to reflect the appropriate 

Sludge Hauling, Contractual Services - Accounting, and Contractual 

Services - Legal expenses. The specific adjustments to each rate band and 

system are shown in the table below



PAGE 185 

PAAISSuE25: Should any adjustments be made for Director and Officers Liability 

insurance? 

STIPULATION 

PAA ISSUE 29: 

STIPULATION 

consistent with CoIllmiSsion pmctice, O&M expenses shaU be reduced by 

$5,289 for its jurisdictional systems to ~flect a sharing of the cost of 

Director and Officers Liabiity (DOL) insurance between ratepayem and 

the Utility, as shown in the table below: 

Should an adjustment be made to the Utility's normdidon adjusttnarts? 

O&M expenses shall be decreased by $33,748 for water and increased by 

$1,768 for wastewater. The specific adjustments for each rate band and 

stand-alone system are shown in table below:



PAGE 186 

PAAIssUE30: Should an adjustment be made to the Utility's pro forma expense 

adjustments? 

STJl'ULATION O&M expenses shpu be increased by $83,790 for water and 

$43 1 for waskmkr, as shown in the table below. In 

file a report with the Commission detailing the outcome of the dispute 

with the City of Lake Worth Utilities, within 30 days of the resolution of 

thedispute



PAGE 187 

PAA ISSUE 31: 

STIPULATION. 

PAA ISSUE 34: 

STIPULATION: 

PAA ISSUE 41: 

STIPULATION 

Should an adjustment be made to O&M expense to remove the additional 

cost of mailing multiple bills to the same customers who have more than 

one class of service? 

The costs of mailing 2,892 duplicate bills in the amount of $14,142 shall 

be removed fiom O&M expense for the Fairways water system. 

What, if any, limit should be imposed on the subsidies that could result if 

the Utility's rate bands and stand-alone systems are partially or fully 

WnsOlidated? 

The appropriate subsidy limit for the water systems and the wastewater 

systems shall be $12.50. This subsidy lit is applicable only to the 

residential class, and is based upon usage levels of 7 kgals per month for 

the water systems and 6 kgals per month for the wastewater systems. 

Should the Utility be authorized to revise its miscellaneous service 

charges, and, ifso, what are the appropriate charges? 

AUF shall be authorized to revise the Miscellaneous Service Charges for 

its Breeze Hill and Fairway systems. The appropriate charges are 

reflected below.



PAGE 188 

PAA ISSUE 42: What are the appropriate service availabfity charges and allowance for 

funds prudently invested charges for the Utility? 

STIPULATION 

PAAISSUE48: 

STIPULATION 

The Utility’s previously-approved uniform meter installation, service 

installation, main extension, and plant capacity charges are appropriate for 

AUF’s Breeze Hill, Fairways, and Peace River stand-alone systems. 

AUF’s proposed uniform engineering fees are cost-based and appropriate. 

However, the Utility’s proposed uniform field inspection fees shall be 

denied for lack of support documentation in accordance with Section 

367.091(6), F.S. 

Should the Utility be required to provide proof that it has adjusted its 

books for all Commission approved adjustments? 

To ensure that the Utility adjusts its books in accordance with the 

Commission’s decision, AUF shall provide proof, within 90 days of the 

final order in this docket, that the adjustments for all the applicable 

National Association of Regulatory Utility Commissioners Uniform 

System of Accounts primary accounts have been made. 

B. b e B Sti~nlatio~~ Are Issues to Which AUF and StaEAgree and the Intervenors Take 

No Position 

ISSUE 12: What is the appropriate Commission-approved leverage formula to use in 

the case? 

STIPUJATION 

AUF and staff agree that the appropriate leverage formula to use is the 

leverage formula in effect when the Commission makes its final decision.



PAGE 189 

I I I 1 I I 1 I I l l I I I I 

I hid 4 

I l l I 

~ U S U X I 

I ! ! I ! I ! I I I' I 91.581 I I 91.551 

s I I I I I I I 1 / 1 1 I I I I 1w1 mmn 

b E!( sUp"1lbS 

I I I I I I 1 I I I I I I I I IWI RbllYh" 

Blndt 

I ! - ........ Y 

I I "..,, 

Attachment 1 

(Page 1 of 2) 

I I ","., I 

I



PAGE 190 

Attachment 1 

. (Page2of2)



PAGE 191 

Attachment 2 

(Page 1 of 2)



PAGE 192 

8msz8 Hlll 

Fslvwsy. 

Pea- RWr 

Total CU.tOrn1OI11 

128 132 1.00 NA 100.00 87.00 82.00 100 Prll)lOKlS, 

241 100 BuPYIau." 

107 Tal 1 .oo NA 100.00 81.70 79.00 100 BYUlOUI 

17.154 

Attachment 2 

(Page 2 of 2)



PAGE 193 

I I I I I I I I I I 85.351 I I 

Attachment 3

lr6I 3DVd 

SM-OEEOOI *ONLEDI~~~ 

SM-iIOiI-ZOIO-ZI-3Sd 'ONXEKIXO

ORDER NO. PSC- 12-0 1 02-FOF- WS 


PAGE 195 

Aqua Utllities Florida, Inc 

Schedule No. 1 

Capital Structure 13-Month Average 

Test Year Ended 4/30/10 

Docket NO. 100330-WS 

Per Utilitj 

1 Long-term Debt 

2 Short-term Debt 

3 Preferred Stock 

4 Common Equity 

5 Customer Deposits 

6 Deferred Income Taxes 

7 Total Capital 

Per Commission 

8 Long-term Debt 

9 Short-term Debt 

11 Preferred Stock 

11 Common Equity 

12 Customer Deposits 

13 Deferred Income Taxes 

14 Total Capital 

$26,952,309 

0 

0 

42,549,814 

84,294 

1.456.472 

$71.042.890 

$26,952,309 

0 

0 

42,549,8 14 

84,294 

$0 $26,952,309 ($13,447,035) $13,505,274 

0 0 0 $0 

0 0 0 $0 

0 42,549,814 (21,228,937) $2 1,320,877 

0 84,294 (33,594) $50,700 

a1.456.472 1444e $1.470.921 

$P&lL@UB- $36.347.773 

$0 $26,952,309 ($14,272,236) $12,680,073 

0 0 0 0 

0 0 0 0 

160,093 42,709,907 (22,616,462) 20,093,445 

(33,594) 50,700 0 50,700 

6zz4U2L3xm Q 2J23.2a 

!tiUza$71.846.819- s34.958.122 

37.16% 5.10% 1.89% 

0.00% 0.00% 0.00% 

0.00% 0.00% 0.00% 

58.66% 9.76% 5.73% 

0.14% 6.00% 0.01% 

0.00% 

LQu% z&3% 

36.27% 5.10% 1.85% 

0.00% 0.00% 0.00% 

0.00% 0.00% 0.00% 

57.48% 9.26% 5.32% 

0.15% 6.00% 0.01% 

0.00% 

JJuu m 

LOW HIGH 

RETURN ON EQUITY 8.76% 10.76% 

OVERALL RATE OF RETURN 6.89% 8.04%



PAGE 196 

Aqua Utilities Florida, he. 

Water Rate Bond 1 $2,275,576 $590,657 25.96% $2,866,233 $2,199,070 $357.902 16.28% 

Water Rate Band 2 



Breeze Hil - Water 

Fairways - Water 

Peace River - Water 

TOTAL WATER 

Wastewater Rate Band 1 




Breeze Hill - Sewer 

Fairways - Sewer 

Peace River - Sewer 

TOTAL WASTEWATER 

TOTAL WATER AND WASTEWATER 

12 19,628 

910,056 

3,618,129 

30,232 

136,226 

hLglB 

$8.255.666 

$375,720 

3,360,115 

401,648 

490,352 

35,049 

79,634 

$i&&Lw 

%13.080.197 

400,459 

6,587 

1,454,330 

36,525 

73,075 

42228 

$2606.861 

$151,076 

556,647 

523,730 

70,073 

60,183 

115,633 

w 

aLI2tGm 

$4.105.812 

32.83% 

0.72% 

40.20% 

120.82% 

53.64% 

ULE4 

40.21% 

16.57% 

130.40% 

14.29% 

171.71% 

145.21% 

2Uai 

2L322i 

$1,620,088 

$916,643 

$5,072,459 

66,757 

209,301 

910.862.527 

$526,796 

$3,916,762 

$925,378 

$560,425 

95,232 

195,267 

l.LU2.l 

s6.323.487 

s17.186.014 

1,200,915 

907,847 

3,s 16,247 

30,953 

134,652 

$8.357.510 

$377,734 

3,404,103 

420,068 

510,420 

36,088 

80,439 

2e282 

s4.908.138 

$.LuLma 

273,953 

8,796 

991,557 

3 1,973 

43,034 

41.614 

a24iua 

$84,454 

168,073 

474,876 

(14,570) 

27,093 

100,815 

m 

s2luuZ2 


nn..m N". innmn-ws 

22.81% 

0.979/b 

25.98% 

103.29% 

31.96% 

zm%l 

22.36% 

4.94% 

113.05% 

-2.85% 

75.08% 

125.33% 

2!i.W& 

LLS 

WEB 

$2,556,973 

1,474,868 

916,643 

4,807,804 

62,926 

177,686 

$=!Luus 

$462,187 

3,572,176 

894,944 

495,850 

63,181 

181,253 

w 

8%2m€!u 

u2JiLu



PAGE 198 

Aqua Utilities Florida, Inr -Wastewater Band 1 

Schedule of Wastewater Rate Base 

Test Year Ended 4LXlLlO 

1 Plantinselvice 

Schedule No. 3-B 

Docket No. Io(Uu)-WS 

2 LandandLsndRights 108,974 0 108,974 0 108,974 

3 Non-d anduseful Components 0 (53,635) (53,635) (7,748) (61,383) 

4 AamnulateaDepreciation (910,328) (45,039) (955,367) (6,353) (961,720) 

5 CIAC (619,088) 0 (619,088) 0 (619,088) 

6 AmorihionofCIAC 436,809 0 436,809 0 436,809 

7 workipgcapiiAuowance - 0155.468 15$t168(24.168) 131.300 

B Rate- ===QaQL%Z&m-



PAGE 199 

Aqua Utilities Florida, Inc - Band 1 for Water and Wastewater 

Adjostments to Rate Base 

Test Year Ended 4i30/10 

Plant In seriice 

1 Type A Approved Stipulations. 

2 Reflect the appropriate amount of pro forma projects. (Issue 3) 

3 Appropriate af3liate-aUocation plant costs. (Issue 18) 

Total 

Non-used and Useful 

To reflect net non-used and useful adjustment (Issues 47) 

Accumulated Depreciation 



3 Appropriate afi6liate-allocation plant costs. (Issue 18) 

Total 

WorW Caoital 

I Type A Approved Stipulations. 

2 To amortize Phase I Monitoring Plan Costs. (Issue 1) 

3 Reflect appropriate deferred rate case expense. (Issue 8) 

Total 

Schedule No. 3-C 

Docket No. 10033CWS 

($239,872) 

0 

(19.4331 

t-iu2am 

&La&% 

($24,174) 

0 

33.480 

&T!22QG 

($269,868) 

14,047 

127.981 

l,$EL&a 

($9224) 

0 

w 

fxuu 

lszIa4 

($12,936) 

0 

6.583 

4&w 

($50,381) 

2,497 

23.716 

fLwJ&4



PAGE 200 

Aqua Utllltlea Florida, Inc. -Water Band 1 

Statement of Water Operations 


Schedule No. 4-A 

Docket No. 100330-WS 

1 Operating Revenuw: $2.275.576 $ZUZ 62.866232 r$667.1631 $2.199.070 $357.902 $2.556.973 

16.28% 

Operating Expensea 

2 Operation& Maintenance $1,302,923 $244,702 $1,547,625 ($157,130) $1,390,495 $1,390,495 

3 Depreciation 269,400 103,592 312,992 (46,910) 326,082 326,082 

4 Amortization 0 10,667 10,667 0 10.667 10.667 

5 Taxes Gther Than Income 228,179 3,370 231,549 (37,216) 194,333 16,106 210,439 

6 IncomsTaxes i83,xo 41,636 224,896 uhzlhz). l%Ml 

7 Total Operating Expense M&l.!Z2 %L%L?§l 2,XU.ZB 1,984306 2.129.029 

8 Operating Income =- -($263.7391 &QUYm$212119 w@?2 

9 &&Base &l&l222 $5.337.692 $5.961.209 $Le6L2Qe 

10 Rate of Return !.LE% LYE5 uL?% LWi



PAGE 201 

Aqua Utilities Florida, he. - Wastewater Band 1 

Statement of Wastewater Operatlons 


1 Operatlng Revenues: $x&,mw $32!xE6- 

Operating Expenses 

2 Operation & Maintenance 

3 Depreciation 

4 Amortization 

5 Taxes mer Than Income 

6 Income Taxes 

7 Total Operating Expense 

8 Operating Income 

9 RateBase 

10 Rate of Return 

$329,918 $45,771 

5,577 20,252 

0 3,423 

23,402 15,504 

6 4 p a m 

m@Q@ 

fiL!mZ' s461l1 

iLY34a 

2&24 

$375,689 

25,829 

3,423 

38,906 

a 

!l7.!Uz 

$16444 

$2L?.Lm 

222% 

m 

$333,321 

17,942 

3,423 

31,516 

UH6.l 

3.lLLXl 

6Ua 

t?i@wB 

AQa 



-.$462.187 

22.36% 

$333,321 

17,942 

3,423 

3,800 35,317 

w 22.m 

w &EJ!g 

uUQ4 s&uL 

w 

UE5



PAGE 202 

Aqua Utilities Florida, Inc -Band 1 for Water and Wastewater 

Adjjustmeut to Operating Income 

Test Year Ended 4DOllO 

Cuemtim Revenues 

1 Remove quested final revenue ma-. 

2 Reflectappmpnat ‘ e amount of BIlllualized revenues. (Issue 15) 

Total 

ODerationandMaintenan CeEmenSe 


2 ToamortizePbaseI~ Plan costs. (Issue 1) 

3 Reflect effect of additional AAI cnstomers. (Issue 16) 

4 Reflectappropnate ’ affiliate-allocation expenses. (Issue 17) 

5 Remove executive incentive compensation. (Issue 19) 

6 Reflect amount of salaries & wages. (issue 20) 

7 Reflectappropnate ’ amount of bad debt expeme. (Issue 21) 

8 Reflect appropriate amount of rate case expense. (Issue 22) 

Total 

Demiation b eme -Net 

1 Type A Approved stipulations. 


3 Reflect appropriate non-U&U depreciation expense. (Issues 4-7) 

4 Appropriate athliate-allocation plant costs. (Issue 18) 

Total 

Amortization~er~ 

Appropriate Regulatory Asset (Issue 38) 

Taxes 0th~ Than Income 

1 RAFs on revenue adjustments above. 


3 

4 

5 

Reflect the appropri& amount ofpro forma projects. (Issue 3) 

Reflect approPriate non-U&U properly taxes. (Issues 4-7) 

Reflect correspmding payroll taxes on salaries & wages adjustment (Issue 20) 

Total 

Sebednle No. 4C 


($567,301) 

l,B&.a 

f2sLLa 

($54,035) 

(14,047) 

(6.970) 

(63,748) 

(10,771) 

(32,530) 

(18,134) 

1%157.13111 

($13,756) 

0 

326 

@.&q 

f&w!4 

($151,605) 

m 

lsu.2Jm 

($1,074) 

0 

(231) 

lsL&Ea



PAGE 203 

Aqna UtiIities Florida, Inr - Water Band 1 

Water Monthly Service Rates 

Test Year Ended 4nOilO 

RestlcntiaL General Service and Multi-Family 

Base FaC7%charge by Meter S k 

518" x 314" 

314" 

1" 

I-1R" 

2" 

3" 

4? 

6" 

8" 

10" 

Gallonage Charge RS Tier One 

Gallonage Chge RS Tier Two 

GalJonageChargeRSTierThree 

Gallonage Charge GS 

Irriwtion 

Base Facility Charge by Meter Size: 

5/8" x 314" 

314" 

1" 

I-la" 

2" 

3" 

4" 

Gallonage Charge Tier one 

Gallonage cbrnge Ti two 

Gallonage cbarge Tier three 

Private Fire Proteetion 

Base Facility Charge by Meta Size: 

2" - 

3" 

4" 

6" 

8" 

10" 

3,000 Gallons 

5,000 Gallons 

10,000 Gallom 

$14.13 

$21.19 

$35.31 

$70.63 

$113.01 

$226.03 

$353.17 

$70633 

$1,130.13 

$1,624.57 

$2.00 

$2.51 

$6.01 

$334 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$OB0 

$0.00 

$9.42 

$18.84 

$29.44 

$58.86 

$94.18 

$13538 

$15.64 

$23.45 

$39.08 

$78.16 

$125.06 

$250.14 

$390.84 

$781.67 

$1,250.68 

$1,797.86 

$221 

$2.78 

$6.65 

$3.70 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.04 

$0.00 

160.00 

$10.42 

$20.85 

$32.58 

$65.14 

$10423 

$149.82 

$17.66 

$26.48 

$44.14 

$88.28 

$14124 

$282.49 

$44139 

$882.78 

$1,412.44 

$2,03039 

$6.49 

$9.73 

$12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$88.28 

$14124 

$282.49 

$441.39 

$6.49 

$9.73 

$12.98 

$11.77 

$23.54 

$36.78 

$73.57 

$117.70 

$16920 

$18.57 

$27.86 

$46.43 

$92.85 

$148.56 

$297.12 

$46425 

$92850 

$1,485.60 

$2,135.55 

$333 

$5.84 

$8.76 

$4.64 

$18.84 

$2826 

$47.10 

$9420 

$150.72 

$301.44 

$471.00 

$333 

$5.84 

$8.76 

$1238 

$24.76 

$38.69 

$7738 

$123.80 

$171.96 

Twid Residential Bib 5B" I 314" Meter 

$20.13 $22.21 $37.13 $28.56 

$24.13 $26.69 $50.1 1 $3522 

$36.68 $40.59 $95.52 $61.91 

Schedde No. SA 


NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NfA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$0.72 

$1.08 

$1.80 

$3.59 

$5.75 

$11.50 

$17.97 

$35.93 

$57.49 

$82.64 

$0.13 

$023 

$034 

$0.18 

$0.73 

$1.09 

$1.82 

$3.65 

$5.83 

$11.66 

$1823 

$0.13 

$023 

$034 

$0.48 

$0.96 

$1.50 

$2.99 

$4.79 

$6.89



PAGE 204 

Aqna Utilities Florida, Inc - Wastewater Band 1 

Wastewater Monthly Service Rates ~ 

Test Year End& 4/30/10 

Residential 

Basc Facility Cbarge All Meter Sizes: 

Gallonage Charge -Per 1,000 

gallons (6,000 gallon cap) 



518" x 314" 

314" 

1" 

1-m" 

2" 

3" 

4" 

6" 

8" 

1 0" 

Gallonage Charge, per 1,000 Gallons 

Flat Rate Residential 



Flat Rate General Service 

Reuse per Sprinkler Head 

3,000 Gallons 

5,000 Gallons 

10,000 Gallons 

(Wastewater Gallonage Cap - 6,000 Gallons) 

$17.13 

$4.75 

$17.13 

$25.70 

$42.84 

$85.66 

$137.07 

$274.12 

$428.00 

$856.63 

$1,370.61 

$1,97024 

$5.69 

$32.72 

N/A 

NIA 

NIA 

$21.50 

$5.96 

$21.50 

$3225 

$53.76 

$107.49 

$172.01 

$343.99 

$537.48 

$1,074.98 

$1 ,719.97 

$2.472.44 

$7.14 

$32.72 

NlA 

NIA 

NIA 

$37.87 

$9.53 

$37.81 

$56.81 

$94.68 

$18936 

$302.97 

$605.94 

$946.78 

$1,893.57 

$3,029.70 

$4,355.20 

$11.43 

$0.00 

$3.91 

$475.78 

$0.50 

Twical Residential Bills 98'' I 3/4" Meter 

$31.38 $39.38 $66.46 

$40.88 $51.30 $85.52 

$45.63 $5726 $95.05 

$23.11 

$7.81 

$0.88 

$1.32 

$2.20 

$4.40 

$7.04 

$14.08 

$21.99 

$43.99 

$70.38 

$101.17 

$9.37 

$1.54 

NIA 

NIA 

NIA 

$46.54 

$62.16 

$69.97 



NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$0.88 

$0.30 

$0.90 

$135 

$225 

$4.50 

$7.19 

$14.39 

$22.48 

$44.96 

$71.93 

$103.40 

$036 

$1.56 

NIA 

NIA 

NIA



PAGE 205 

Aqna UtiIities Florida, Ine. - Water Band 2 

Schedule of Water Rate Base 


DOeLet No. 1oo33o-WS 

1 PlentinSerVice $6,627,158 $507,678 $7,134,836 $23,352 $7,158,188 

2 LanddLandRights 55,132 0 55,132 0 55,132 

Non-usul and Usefi~I 

3 componentr 0 (616,233) (616,233) (45,682) (=1915) 

4 Acamdated~on (1,932,975) (57,867) (1,990,842) 61,717 (1,929,125) 

5 CIAC (IP1,lll) 0 (1,231,111) 0 (1,23231,111) 

6 AmortizarionofCIAC 324,656 0 324,656 0 324,656 

7 WorLingCapifalAJlO~ - 0 375.622 375.622 1'58.639) 316.983



PAGE 206 

Aqm Utilities Florida, Inc - Wastewater Band 2 



Docket No. 10033&WS 

1 PIfmtin$emiffi $13,928,482 $1,.528,184 $15,456,666 ($358,486) $15,098,180 

2 LanddLandRighls 490,698 (105,812) 384,886 laO,W3 544,979 

3 Nm-d and UseM C!anpomls 0 (17391) (173,991) (128,717) (302,708) 

4 Accadadwim (6,S40,493) 40,349 (6,500,144) 150,203 (6,349,941) 

5 CIAC (2,878,828) 0 (2,878,828) 

6 Ainor!btionofcLAC 1,910,455 0 1,910,455 0 1,910,455 

7 worlringcapitalAllowance - 0607.703 

8 RateBase



PAGE 207 

Aqua Utilities Florida, Inr - Band 2 for Water and Wastewater 

Adjnstmeuts to Rate Base 

k t Year Ended 4/30/30 

Plant In service 

Type A Approved Stipulations. 

Reflect &e appropriate munt of pro forma projects. @ue 3) 

Appropriate afhliare-allocation plant costs. (Issue 18) 

Total 


Non-used and Useful 

To deet net non-wed and useful adjnsbnent. (Issues 4-7) 

Accumulated Devreciation 

Type A Approved Stipulatiom. 

Reflect the appropriate amount of pro forma projec!x (Issue 3) 

Appropriate affiliate-allocation plant costs. (Issue 18) 

Total 

Wofic! CaDital 

Type A Approved StipuLations. 

To amortize Phase I Monitoring Plan Costs. (Issue 1) 

Reflect appropriate deferred rate case expense. (Issue 8) 

Total 



$16,594 

21,004 

223.22 

&2 

&$3Lf&a 

$46,180 

(93) 

.&@Q 

SfiLZLz 

($122,724) 

6,244 

a 

c2Zu2a 

($359,540) 

0 

m 

l2wk?&a 

$%?am2 

la2Ga.n 

$125,161 

0 

$luLacu 

($13 1,400) 

11,452 

L$haa47,



PAGE 208 

Aqua Utilities Florida, Inc. - Water Band 2 


1 Operating Revenues: 


2 Operation & Maintenance 



5 Taxes Other Than Income 

6 IncomeTaxes 



9 RateBase 


%1.219.629 

$693,596 

142,446 

0 

210,070 

4?!%%% 

1.1 13.046 

lluGu 

&%&lL&Q 

LZ!% 

$!lQ!uS 

$115,399 

32,326 

9,125 

(32,147) 

z625a 

2eL414 

fiu!LQu 

$1.620.088- 

5808,995 ($82,705) 

174,772 (17,305) 

9,125 0 

177,923 (27J21) 

u1112.686) 

1.314.50Q 

$lazraa- 

s4.O52.060 

22Qi 

$1.200.915- 

22.81% 

$726,290 

157,467 

9,125 

150,702 12,328 

B.2Bw 

1.074.583 

wa 

$4.032.808 

LU 



u.474.868 

$726,290 

157,467 

9,125 

163,030 

.u?.+?B 

LS&m 

a&d!lz 

$4.032.808 

UE5



PAGE 209 

Aqua Utilities Florida, Inc - Wastewater Band 2 

Statement of Wastewater Operations 



2 Operation &Maintenance 




6 IncomeTaxes 



9 RateBase 


D.360.115 S556.64Z 

$1,836,745 $184,348 

439,738 119,387 

0 11,604 

225,3 13 117,092 

~~ 

2.832.892 

$swuu 

$6.910.314 

LG.325 

n.916.762d512.6591 

$2,021,093 ($170,946) 

559,125 (55,199) 

11,604 0 

342,405 (33,737) 

3.kv.U- 

3.248.51Q 1359.492) 

&Su22a153.16n 

%&806.147 

U2Yi 

,W!tQUB $168.073 

4.94% 

$1,850,147 

503,926 

11,604 

308,668 1,563 



m@&Q 

2.889.018 

$ufLa84w 

$8.569.592 

u 

$3.572.176 

$1,850,147 

503,926 

11,604 

316,231 

2zuzz 

2.956.982 

u 

s8.569.592 

w

1 

2 

1 

2 

3 

4 

5 

6 

7 

8 

1 

2 

3 

4 

1 

2 

3 

4 

5 



PAGE210 

Aqua Utilities Florida, Inr - Band 2 for Water and Wastewater 

Adjustment to Operating Income 

ooeratine Revenues 

Remove quested final revenue incrurSe. 

Reflect appropriate . amount of aunnaljzed revenues. (Issue 15) 

Total 

Gueration and Maintenance Emense 



Reflect efted of additional AAI customers. (Issue 16) 

Reflect appropriate affiliate-allocatiOn -. (issue 17) 

Remove exdve incentive compensation. @.me 19) 

Reflect amount of salaries & wages. &sue 20) 

Reflect appmprkte amount of bad debt expense. (Issue 21) 

Reflect appmprkte amount of rate case expense. @.me 22) 

Total 

D- iation Exwnse - Net 


Reflect the appropriate amomt of pro forma projeds. 3) 

Renect approprinte non-U&U depreciation expense. (Issues 4-7) 

Appropriate afiihte-allocation plant costs. (Issue 18) 

Total 

Amorli7ationOherEXDense 

ApproPriate Regulatory Asset (Issue 38) 

Taxes Other Than Income 

RAFs on revenue adjustments above. 


Reflect the appropriate amount of pro forma projects. (Issue 3) 

Reflect appropriate non-U&U propertytaxes. (Issues 4-7) 

Reflect comsponding payroll taxes on salaries &wages adjustment (Issue 20) 

Total 


Docket No. 100330-WS



PAGE 21 1 

Aqua Utilities Florida, Jnc - Water Band 2 

Water MontbIy Service Rates 

Base FaciIiQ Charge by- Size: 

518" Y 314" 

314" 

1" 

l-1R" 

2" 

36 

4" 

6" 

8" 

10" 

Gallonage Charge RS Tier Onc 

Gallonage Charge RS Tier Two 

Gallollage Charge RS Tier Thra 


Inktion 

BascFacilityCharge byMeter Sk. 

5/13" x 314" 

3i4" 

1" 

l-ll2" 

2" 

3" 

4" 

Private F'ire Protection 


3" 

4" 

6" 

8" 

10" 

3,000 Gallons 

5,000 Gallom 

l0,OOo Gallom 

$16.29 

$24.44 

$40.73 

$81.46 

$130.34 

$260.69 

$40731 

$814.63 

$1,303.41 

$1,873.65 

$3.82 

$4.77 

$11.46 

$5.33 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$10.86 

$21.72. 

$33.94 

$67.89 

$108.61 

$156.14 

$18.91 

$2837 

$4729 

$94.57 

$15132 

$30266 

$472.88 

$945.77 

$1,513.24 

$2,17527 

$4.43 

$5.54 

$1330 

$6.19 

$0.00 

00.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$12.61 

$2522 

$39.41 

$78.81 

$126.09 

$18127 

$1766 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$882.78 

$1.412.44 

$2,03039 

$6.49 

$9.73 

$12.98 

$6.98 

$17.66 

$26.48 

W.14 

$8828 

$14124 

$282.49 

$441.39 

$6.49 

$9.73 

$12.98 

$1 1.77 

$23.54 

$36.78 

$73.57 

$117.70 

$16920 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$958.50 

$1,533.60 

$234.55 

$6.55 

$9.83 

$13.10 

n.35 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$655 

$9.83 

$13.10 

$12.78 

$25.56 

$3994 

$79.88 

$127.80 

$183.71 

Tvuial Rcsidential Bills 5/8" I 34" Meter 

$27.75 $3220 $37.13 $38.82 

$3539 $41.06 $50.11 $5 1.92 

$59.24 $68.76 $95.52 $97.79 

Schednk No. SA 

Docket No. 1o(uucWS 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

N/A 

NIA 

NIA 

NIA 

NIA 

$0.57 

$0.86 

$ 1.43 

$2.86 

$4.58 

$9.15 

$1430 

$28.60 

$45.76 

$65.78 

$020 

5029 

$039 

$022 

$0.57 

$0.86 

$1.43 

$2.86 

$458 

$9.15 

$1430 

.5020 

$029 

5039 

$0.38 

$0.76 

$1.19 

$2.38 

$3.81 

$5.48



PAGE 212 

AquaUtilitiesFlorida,In~-WastewaterBand2 

Wastewater Monthly Service Rates 

Residential 

BaseFacility Charge An Meter Si $35.44 $35.44 $37.81 

Gallonage charge - Per 1,Ooo 

gauonS (6,000 ganm cap) 


Base Facility charge byuetOr Si: 

518" x 314" 

314" 

1" 

I-1R" 

2" 

3" 

4" 

6" 

8" 

10" 

3,000 Gallons 

5,000 Gallons 

10,Ooo Gallons 

(wastewater Gallom Csp - 6,000 Gallons) 

$7.11 

$35.44 

$53.16 

$88.60 

$177.19 

$28352 

$567.03 

$885.99 

$1,771.89 

$2,835.19 

$4,075.58 

$8.53 

$56.44 

$47.02 

NIA 

NIA 

NIA 

$7.11 $9.53 

$35.44 $37.81 

$53.16 $56.81 

$88.60 $94.68 

$177.19 $18936 

$28352 $302.97 

$567.03 W594 

$88599 $946.78 

$1,171.89 $1,89357 

8.835.19 $3,029.70 

$4,07558 $4,35520 

$8.53 $11.43 

$56.44 $0.00 

$47.02 m.00 

NIA $73.91 

NIA $475.78 

NIA $0.50 

$34.38 

$8.86 

$34.38 

$51.57 

$85.95 

$171.90 

875.04 

$550.08 

$859.50 

$1,719.00 

$2,750.40 

$3953.70 

$10.63 

$60.01 

$50.00 

NIA 

NIA 

NIA 

'Ibical Residential Bills W'' I 314" Meter 

$56.17 $56.71 $66.46 $60.96 

$70.99 $10.99 $85.52 $78.68 

$78.10 $78.10 $95.05 $87.54 

SebednkNa 5B 

DoeLet No. 1oo33o-ws 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$0.78 

$020 

$0.78 

$1.16 

$1.94 

$3.88 

$621 

$12.42 

$19.41 

$38.83 

$62.12 

$8930 

$024 

$136 

5113 

NIA 

NIA 

NIA

. ~ 

... 



PAGE 213 

. . 

Aqua Utilitie Florida. Inc - Water Band 3 

sehedule of Water Rate Base 

Test Year Ended 4BMO 

Schedule Na 3-A 

Do&i No. Io(u3gWS 

1 Plantinservia s~379w $189991 $1986,762 ($8,062) $1978,7W 

2 LandanaLandRighm 327.52 0 32,752 0 327.52 

0 (38983) (38,983) (403) (39386) 

(552W (y1.170) (606,774) 14,663 (592,111) 

5 CIAC (436206) 0 (436,206) 0 (436206) 

6 AmorbiionofcUC 21 1,746 0 211.746 0 211,746



PAGE 214 

Aqua Utilitier Florida, be - Waatmabr Band 3 


$3,677,330 

I55,M3 

(1.089,003) 

0 

(422578) 

201,858 

B 

S3.877,187 ($127.183) 

155,033 0 


DDeM No. looU(cWS 

0 0 

(1.114824) (4,681) 

(422578) 0 

201,858 0 

zl53 2433.4 

n.774.829b 

$3,750,004 

155,033 

0 

(1,119,505) 

207,858



PAGE 215 

Aqua Utilities FloeMa, Ine -Band 3 for Water and Wasfewater Scbedole NIL ..- X - 

Adjnstments to Rate Base 

Docket No. 100330-W 


PLantInscniCc 

14pe A Approved Mpulations. 

Reflect the appropriate amount of pro forma projects. &me 3) 

Awropriate afmate-allocationplant Costs. (Issue 18) 

Total 

powused and Use@ 

To reflect net mn-d ami uscfd adjustment (Issues 4-7) 

AccumdatedDcorenab . ‘on 

Type A Approved Siipulations. 

Reflect the appropnare ’ amormtofproformapojects. (rssuc3) 

Appropriate &li&dodonplant costs. (Issue 18) 

Total 

wo* cao ital 


To amortize P b I Monitoring Plan Costr. (Issue 1) 

Reflect appropriate deferred mte me. expenst. (Issue 8) 

Total 

SlSlO 

0 

fuza 

m€L!ta 

ls4Q21 

$4,947 

0 

m 

a4m 

($15,939) 

3,814 

ZSEtE 

ls&?m



PAGE 216 

I 

2 

3 

4 

5 

6 

7 

8 

9 

.o 

Aqua UtiUtles Florida, Inr - Water Band 3 


Operatlog Revenues: 


Operation & Maintenence 

Depreciation 

Amortization 

Taxes Other Than Income 

Income Taxes 

Total Operating Expense 

Operating Income 

Rate Base 

Rate of Return 

M 

$565,73 1 

36,515 

0 

65,436 

e24e6 

261JzB 

w 

&iLU&L2 

lu% 

&S!l 

$65,967 

27,206 

2,215 

428 

kWL5.l 

u 

LUtm 

$631,698 $66,298 $697,996 

63,721 (10,482) 53,239 

2,275 0 2,275 

65,864 (1,372) 64,492 

u G z u 2 f i l w 

11l248p14916M 

wL!El!uu sku42 



&z!xs2l.u42 

0.97% 

$691996 

53239 

2,215 

396 64,887 

Lla ZLs 

zi52 @5%2 

$.&a2 suL681 

JslaU% 

22.6%

ORDER NO. PSC-12-01 02-FOF-WS 


PAGE 217 

Aqua Utilltles Florida, Inr - Waatewater Bend 3 

Statement of Waatewater Operations 

1 Operatlng Revenues: 


2 Operation&M&emm ce 




6 IncomeTaxes 



9 RateBnre 

10 RateofRetnrn 

$365,583 $11,692 

124,914 14,149 

0 871 

21,394 81,175 

a52am 

4m.!s&L!.9l 

l&!zm- 

s252&64a 

Ui!% 

$377,275 ($115,128) 

139,063 (7,001) 

871 124,289 

102,569 (25,512) 

,qJ@m l3iLLUlm 

uzLS2- 

uKul2tZ2ua 

s2774.829 

UU 

$262,147 

132,062 

125,160 



113.05% 

77,057 21,369 

luL!m142924 

mLu!a$il&24u 

$2667.8oa 

5u2% 

B!kL!M 

$262.147 

132,062 

125,160 

98,426 

u633 

29t428 

sL2Lu 

$2.667.800 

LE4

1 

2 

1 

2 

3 

4 

5 

6 

7 

8 

1 

2 

3 

4 



PAGE 21 8 

Aqua Utilities Florida, Inc - h d 

Adjutmerit to Operating Income 

Tat Year Ended 4/30/10 

ODeratine RevcIlIq 

Remove requested final rcvmuc. uuxase. 

Reflect appmprhtc amount of mualized rcvennes. (Issue 15) 

Total 

oDerationandMsintenenceEmcnse 

Type A Appmvd stipulations. 

To amortize phase I Monitoring Plancosts. (Issue 1) 

Rcflecteffeetofadditi~AAIcllJtomers.(Issue16) 

Rdlectappropnate ' affiliate-allocation-.(lssue17) 

Removeexendivemcativeeompensah -on (lssue19) 

Rcflect Bmount of salaries & wages. (Issue 20) 

Reflect apppmte ' amount of bed debt expense. (Issue 21) 

Reflect spprogriate amount of rate tasc cxpse. (Issue 22) 

Total 

DemeciationExDensc -Net 

Type A Approved Stipulatioos. 

Reflect the appropriate amount of pro forma projects. (Issue 3) 

Reflect appro+ non-U&U depreciation expea.%. (Issues 4-7) 

AppmPriate~donplantcostp.(Issue18) 

Total 

3 for Water and Wastewater Scbcdole Na 4-C 

~ . - 


Taxes Other llm Income 

RAFs on m e adjustments above. 

Type A Approved stipulations. 

Rcflcct the appropriate . amouut of pro forma projects. 3) 

Reflect appro+ mn-U&U proropaty taxa. (Issues 4-7) 

Refla cmmpondmg ' payroll taxes 011 salaries &wages adjustment (Isme 20) 

Total

-. . 



PAGE 219 

Aqna Utilities rrOr5da, In& - Water Band 3 



518" i314" - 

314" 

1" 

I-lR" 

2" 

3" 

4' 

6"- 

8" 

1 0" 

", 


Gallonage Charge Tier two 

Gallonage Chargc Tier three 


518" x 314" 

314" 

1" 

1-la" 

2" 

30 

4" 

GallonageChargeTierone 

. Gdlmagc charge Tier two 

Gdonagc Charge Tierthree 

Private Fire Protection 

BascFacility ChargebyMeterSm: 

2" 

3" 

4" 

6" 

8" 

10" 

3,000 Gallolls 

5,000 Gallons 

l0,Ooo Galloas 

$16.68 

$25.02 

$41.71 

$83.42 

$133.47 

$266.92 

$417.07 

$834.14 

$1,334.62 

$1,918.52 

$5.01 

$626 

$15.03 

$6.14 

$0.00 

$0.00 

$0.00 

$0.00 

$0,00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$11.12 

$22.24 

$34.76 

$69.51 

$11122 

$159.88 

$16.68 

$25.02 

$41.71 

$83.42 

$133.47 

$266.92 

$417.07 

$834.14 

$1,334.62 

$1,918.52 

$5.01 

$626 

$15.03 

$6.14 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$11.12 

$2224 

$34.76 

$69.51 

$11122 

$159.88 

$17.66 

$26.48 

$44.14 

$88.28 

$141.24 

$28249 

$44139 

$882.78 

$1,412.44 

$2,03039 

$6.49 

$9.73 

$12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$88228 

$14124 

$28249 

$44139 

$6.49 

$9.73 

$12.98 

$11.77 

$23.54 

$36.78 

$73.57 

$117.70 

$16920 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$479.25 

$958.50 

$1,533.60 

$ZJW.55 

$6.55 

$9.83 

$13.10 

$735 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$6.55 

$9.83 

$13.10 

$12.78 

$25.56 

S39.94 

$79.88 

$127.80 

$183.71 

Tv~ierl Residential BiUs YS" I 314" Meter 

$31.71 $31.71. $37.13 $58.25 

$41.73 $41.73 $50.11 $77.91 

$73.03 $73.03 $9552 $97.79 

.- 

Schedule SA 


NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$056 

$0.84 

$1.41 

$2.81 

$4.50 

$8.99 

$14.05 

$28.11 

$4497 

$64.64 

$0.19 

$039 

$038 

$022 

$0.56 

$0.84 

$1.41 

$2.81 

$4.50 

$8.99 

$14.05 

$0-19 

$0.29 

$0.38 

$037 

$0.75 

$1.17 

$2.34 

$3.75 

$5.39



PAGE 220 

Aqua UtSities Florida, be - Wastewater Band 3 

Wastewater Monthly Service Rates 

Reaidenlid 

BaseFacility Chsrgc: AnMeter Sizes: $29.41 

Cenenl Service 

Base Facility Charge by Meter Si: 

518' x 314" 

314" 

1" 

I-1R' 

2" 

3" 

4" 

6" 

8" 

10" 

Gallonage Charge., pa 1,OOO Gsllons 


Jungle- 

Lake Gihou Fsfatcs 

Flat Rate General Service 

LakeGibsonEdam 

FlatRateResidadial 

FhtRafeGdService 

ReuseperSplinLlerHead 

3,000 Gallons 

5,000 Gallons 

10,ooo Gallons 

(W- Gallowe Cap - 6,000 Gsllons) 

$8.99 

$29.41 

$44.12 

$73.53 

$147.07 

$2353 1 

$470.63 

$73535 

$1,470.70 

$2,353.13 

$3382.61 

$10.78 

$39.73 

$83.33 

$518.69 

NIA 

NJA 

NJA 

$33.82 

$10.34 

$33.82 

$50.74 

$8457 

$169.14 

$270.63 

$54126 

$845.71 

$1,691.42 

$2,70629 

$3,89027 

$12.40 

$45.69 

$95.84 

$596.54 

NIA 

NIA 

NIA 

$37.87 

$9.53 

$37.87 

$56.81 

$94.68 

$18936 

$302.97 

$605.94 

$946.78 

$1,893.57 

$3,029.70 

$4,35520 

$11.43 

NIA 

NJA 

$0.00 

$73.91 

$475.78 

$0.50 

$34.38 

$8.869 

$3438 

$551.57 

$8595 

$171.90 

$275.04 

$550.08 

$85950 

$1,719.00 

$2,750.40 

$3,953.70 

$10.63 

$86.07 

~18052 

NIA 

NIA 

NIA 

NIA 

mid Res idential Bills 5A " I 314" Meter 

$56.38 $64.84 $66.46 $60.96 

S7436 $85.52 $85.52 $78.68 

$8335 $95.86 $9S.OS $87.54 

Schedule 5-B 

Doekt No. 10033OwS 

$5.85 

$1.51 

$5.85 

$8.78 

$14.63 

$2925 

$46.80 

$93.61 

$14626 

$292.52 

$468.04 

$672.80 

$1.81. 

NIA 

WA 

NJA 

NIA 

NJA 

NIA 

5038 

$0.10 

5038 

5057 

$0.95 

$1.91 

$3.05 

$6.10 

$953 

$19.05 

$30.49 

$43.83 

$0.12 

$0.95 

$2.00 

NIA 

NIA 

NIA 

NIA



PAGE 22 1 

Aqua EtiWies Florida, Inc - Water Band 4 

sebedale of Water Rate Base 

$10,516,464 

127,298 

0 

(2,356,969) 

(5303,7261 

1,229,588 

- 0 

s7212.655 

$1,260,629 

0 

(203268) 

(143,751) 

36,394 

(4,W 

1.060.448 

s2.006.348 

sii,n7,m ($71,779) 

127,298 0 

(203,268) (115,072) 

(2,500,720) 120,172 

(2,267,332) 0 

1,225,484 0 

1.060.448 

s9219.003- 

SehedoIe No. SA 


~

ORDER NO. PSC12-0102-FOF-WS 


PAGE 222 

$2,683,843 

149,000 

(1.174.W 

0 

. (620,692) 

382,728 

Q 

slAzfwJ 

$2,741,994 

149,000 

(160,078) 

(1208,315) 

(620,692) 

382.728 

Him



PAGE 223 

Aqw Utilities Florida, he - Band 4 for Water and Wastosrter khedok No. 3-C 

Adfertmenb to Rate Base 

Docket No. 10033o-ws 

plaut In savice 

TypeAApprovtdStipolations. 

Rcntct the appp&c. amount of pro forma project% (Issue 3) 

me-- 'on plmt Msts. (Issue 18) 

Total 

NowsedandUsefbl 

To dect n&non-nsed .mi useful adjustment (Issues 4- 7) 

working caoieal 


To amortize Phase IMonitOring PlancostS. (Issue 1) 

Rc&caappopriakdeferredratecase.expense. We8) 

Total 

$79,314 

190 

a668 

LxmL72 

($330385) 

17,354 

J5&@Q 

ll?aual 

($216,878) 

0 

&g& 

l.sx%ua 

&lL!,Sl



PAGE 224 

Aqua Utilities Florida, Inc. -Water Band 4 Schedule No. 4-A 

Statement of Water Operations Docket NO. 100330-WS 



2 Operation & Maintonanw 


4 Amoaization 


6 IncomeTaxea 

7 Total Operating Espense 


9 RateBase 

10 RateofReturn 

$3.618.129 

$2,888,518 

20 1,62 1 

0 

404,493 

4262p 

u4uzl 

!m€U 

$2212.655 

L!u% 

s1.454.330 

$360,534 

140,536 

22,937 

23,586 

28L892 

Hae4pp 

&&uU 

$5.072.459 

$3,249,052 

342,151 

22937 

428,079 

w 

e21L61l 

t!lQ!Lm 

Eu!xK 

uQ% 

$!La!ml- 25.98% 

$2,940,417 

291,693 

243,670 

353,121 44,620 

s4.807.804 

$2,940,417 

291,693 

243,670 

391,141 

28&gzi 

4&.2m 

s6459L8 

$i%wim. 

w



PAGE 225 

Aqua Utllitles Florlda, Inc. -Wastewater Band 4 




1 Operating Revenues: &E!Qs2sE-Lcm m&42z@.mQa $LlQ&QW14.5701 $i+Zm.Q 

-2.85% 

Operatlng Expenses 

2 Operation & Maiitenance $268.984 $6,979 $275,963 ($6,410) $269,553 $269,553 

3 Depreciation 25,126 10,878 36,004 (11,357) 24,647 24,647 

4 Amortizaton 0 817 817 0 817 817 

5 Taxes Othor Than Income 48,154 19,329 67,483 (6,392) 61,091 (656) 60,435 

6 IncomsTaxes z!Jzi~ 5 2 6 5 6 m 4&BLQazm 4218p 

7 Total Operating Expenae 29.%w3.Ll% eusvw 4N.J.a- 2!3m 

8 Operating Income f2?L%u- sLzLIQ2w wm m 

9 RateBasa $1.420.851 st617.892 $1.351.455 &ULm 

10 Rate ofReturn fi&m la% L!u L m

1 

2 

1 

2 

3 

4 

5 

6 

7 

8 

1 

2 

3 

4 

1 

2 

3 

4 

5 



PAGE 226 

Aqua Utilities Florida, Jnc - Band 4 for Water and Wastmvater 

Adjertment to Opelating Income 

ovemtiw Revemes 

Rcmon requested final revme. maease. 

Reflect appqmte . amount of allmmhd . remlles. (ksue15) 

Total 

oDaationandhta&emn CeEnwSc 

A Approved Stipulations. 

To am& phase I Monitoring Plan W. (Issue 1) 

Reflect effect of additidA4I customas. @sue 16) 

Reflect sppropriste afEbtedocalion orpenses. @?sue 17) 

Remove fsscume ‘ incentive compensation. @sue 19) 

Reflect amount of salaries & wages. (rssut 20) 

Reflectapp~m~ofbaddewexpense.(Issue21) 

Reflectappqmte . amountofratecaseexpense.(Issue22) 

Total 

~reciationExoense -Net 

Type A Approved stipulations. 

Reflect the qpmpmtc . amount of pro fornut projects. (Isssuc 3) 

Reflect appqniate m-U&U depreaatton 

AppmpriateaEhte-dlocationplant.@suc 18) 

Total 

Am&tion~EnwSc 

AppqxkteRegukq’Asset (Issue38) 

. . expalse.(Issues4-7) 

Taxes 0th Tban Income 

RAFs on mmue adjnsfments above. 

TypeAApprovedStipulstions. 

Reflect the appmpnate . amomt of pro forma projects. (rssne 3) 

Reflect qpmpmtc . non-U&U pmperty kes. (Issues 4-7) 

ReflectcouqnmdingpqmlItaxcsonsalnries&wagesadjnsment (Issue20) 

Total 

SchedokNa4-C 

Docket No. 100330.WS

ORDERNO. PSC-12-0102-FOF-WS . 


PAGE 22.7 

Aqua Utilities Florida, he - Water Band 4 

Water Monthly Semiee Rates 

518" x 314" 

314" 

1" 

I-ID" 

2" 

3" 

4" 

6" 

8" 

10" 

Gallonage Charge Tier me 


Gallonage charge Tier three 

Gakmagc Charge GS 

5/8" x 314" 

314" 

1" 

1-In' 

2" 

3" 

4" 

I. 

Gallonage Cbarge Tier one 

Gallonagt Chargc Tier two 

Gallonage Charge Tier Gme 


Base Facility Cbarge by Meta Si: 

2" 

3" 

4" 

6" 

8" 

10" 

3,000 Gallons 

5,000 Gallons 


$15.71 

$23.58 

$3929 

$78.58 

$125.73 

$251.46 

$392.91 

$785.82 

$1,25732 

$1,807.40 

$731 

$8.98 

$20.67 

$8.42 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$10.48 

$20.96 

$32.74 

$65.48 

$104.77 

$150.61 

$15.71 

$23.58 

$3929 

$78.58 

$125.73 

$251.46 

$392.91 

$785.82 

$1,25732 

$1,807.40 

$7.31 

$8.98 

$20.67 

$842 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$10.48 

$20.96 

$32.74 

$65.48 

$104.77 

$150.61 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$882.78 

$1,412.44 

$2,030.39 

$6.49 

$9.73 

$12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$6.49 

39.73 

$12.98 

$11.77 

$23.54 

$36.78 

$7357 

$117.70 

$16920 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$95850 

$1,533.60 

$2,20455 

$6.55 

$9.83 

$13.10 

$7.35 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$6.55 

$9.83 

$13.10 

$12.78 

$25.56 

$39.94 

$79.88 

$127.80 

$183.71 

Twical Residential BilL( 3" I 314" Meter 

$37.64 $37.64 $37.13 SS8.25 

$5226 $5226 s50.ii $77.91 

$97.16 $97.16 $98.76 $97.79 

Scbednk No. SA 

Docket No. lwubwS 

$0.97 

$1.45 

$2.42 

$4.84 

$7.75 

$15.49 

$2420 

$4~.41 

$77.45 

$11134 

$033 

$0.50 

$0.66 

$0.37 

$0.97 

$1.45 

$2.42 

$4.84 

$7.75 

$15.49 

$2420 

$033 

$050 

90.66 

$0.65 

$129 

$2.02 

$4.03 

$6.45 

$928 

$0.49 

$0.73 

$122 

$2.44 

$3.90 

$7.80 

$12.19 

$2438 

$39.00 

$56.07 

$0.17 

$025 

$033 

$0.19 

$0.49 

$0.73 

$122 

$2.44 

$3.90 

$7.80 

$12.19 

$0.17 

$025 

$0.33 

$033 

$0.65 

$1.02 

$2.03 

$325 

$4.67



PAGE 228 

Aqua Utilities Florida, Inr - Wastewater Band 4 

Wastewater Moutbly Service &+et 

Residential 

BaseFacByChargeAUMeterSiZes: 

GallonageCharge-Per1,OOO 

a- (6,000 gallon c;lp) 


Base Facility charge by Meter Size: 

518" x 314" 

314" 

1' 

1-1R" 

2" 

3" 

4" 

6" 

8" 

10" 

Gallonage charge, per 1,000 Gallons 

General Service Wastewater Only 

FlatRateResidential 

FIatRateGendservice 

SprinklaHeads 

$75.47 $75.47 $37.87 

$9.31 $937 $9.53 

$75.47 

$11322 

$188.69 

$377.39 

$603.82 

$1,207.65 

$1,886.95 

$3,773.89 

$6,03822 

$8,679.95 

$1125 

NIA 

NfA 

$0.10 

$75.47 $37.87 

$11322 $56.81 

$188.69 $94.68 

$37739 S189.36 

$603.82 $302.97 

$1,207.65 $605.94 

$1,886.95 $946.78 

$3.773.89 $1,89357 

$6,03822 $3,029.70 

$8,679.95 $4,35520 

$1125 $11.43 

NIA NIA 

NIA NfA 

$0.10 $0.50 

$77.89 

p 

3,000 Gallons 

$10358 $103.58 $66.46 $101.41 

5,m Gallons 

$12232 $12232 $85.52 $117.09 

10,Ooo Gallons 

$131.69 

(Wastemter Gallonage Cap - 6,000 Gallons) 

$131.69 $95.05 $124.93 

$7.84 

$77.89 

$1 16.84 

$194.73 

$389.45 

$623.12 

$1,24624 

$1,94725 

$3,894.50 

$6.23 1.20 

$8,95735 

$9,415 

NIA 

NIA 

$0.49 

Schedule No. SB 

Docket No. lw3fowS 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$0.77 

$0.08 

$0.77 

$1.16 

$1.93 

$3.86 

$6.18 

$1236 

$19.31 

$38.62 

$61.80 

$88.84 

$0.09 

NIA 

NIA 

$0.00

ORDFR NO. PSC-124102-FOF-WS 

WCKET NO. 100330-WS 

PAGE 229 

Schedule of Water Rate Baw 

I

ORDER NO. PSCl2-0102-FOF-WS 


PAGE 230 

- !khedok of wa&water Rate Docket 

Aqna tJ4ilitksFloridqIIK.-BrcemEiU Schedule Na 3-B 

Na 100330-WS 

1 Plenrinsem’ce $15.169 $367,187 $382,356 ($23294) $359,062 

2 LanddLamiRights 0 18.519 18.519 0 18.519 

0 010) 

4 AccunmkdDepnCiation (530) (248,771) (249,301) 544 WU757) 

5 CJAC 

-- 

(692) (118.503) (119,195) 0 (119,195) 

6 AmdzationofCIAC 39 118.503 118,542 0 118542 

7 WorkingcllpitalAllOarance - 0 - 0 P & ? . m = 

8 Rate- s.aa!al- szzsul



PAGE 23 1 

A~M Utilities Florida, Inc - Breae Hili 

Adjostmentr to Rate Base 

Nm-d and useful 

To nfled net rum-d and osdol ~justmcnt. (Issues 4 though 7) 

AeeumulatedDersec &ion 

1 TypeAApedS~~ons. 

2 Renedtheapplopnate ' amount of pm formi projects. (Jssue 3) 

3Apppmte . aflsliato-allocationplantt.(Issue18) 

Total 

WOIkkcaO ilal 


2 ToamortivePhaseI~ Plan costs. (Issue 1) 

3 Rethtapprop&cdeferredratecasce%pmse. (Isssue8) 

Total 



($553) 

(21,835) 

ma 

LQUm 

rr&teaas 

($7 12) 

485 

m 

$249 

($6,055) 

295 

l2u5Zl



PAGE 232 

Aqna UUlitiea Florida, Inc - Brew H1u Schedule No. 4-A 

Statement of Water Operattons Docket No. 100330-WS 

I Operating Revenues: 


2 OperntiondtMaintenance 



5 TaxesOtherThunIncnme 

6 IncomeTaxes 


8 Operatlug Income 

9 RateBase 

IO Rate ofReturn 

-a 

$28,149 $3,867 

1,876 12,839 

0 0 

6,628 642 

cZ!nfi&% 

34a6XLw 

fal2Klm 

uLx4 

s!s.z3z1$228941 

$32,016 ($3,471) 

14,115 (906) 

0 2,724 

7,270 (1,669) 

eazBf.L?Lm 

wIbz55u 

=Wua 

m 

7&!% 

BL%xl$i3LxB 

103.29% 

$28,545 

~~ 

13,809 

2,124 

5,601 1,439 

4Lz&&2a2 

IsllJaslw 

U4w 

d.l.%E& 

&232!5 

$28,545 

13,809 

2,724 

7,040 

m 

52452 

&?A2 

sl&€kQ 

LLu



PAGE 233 

Aqua UtUlties Florlda, Inc - Breae Hill 

Statement of Wastewater Operntlons 



2 opeIntion&Maintulancetenalce 




6 IncomeTaxw 


8 Operatlng Income 

~45,222 $6,367 

596 15,415 

0 0 

2,762 5,740 

mbu24 

ilxiau 

w- 

$51,589 ($10,509) 

16,011 (5,940) 

0 0 

8,502 (5,5453 

!5LlumLLm 

aa.2c3.u3a 

lUL!!u- 

maQuBl22 

75.54% 

$41,080 

10,071 

0 

2,951 1,227 

cC!mezeh 

&!Kll.Lc!a 

fJiuz@lm 


Docket No. 1W33O-WS 

s62242 

$41,080 

10,071 

0 

4,183 

2Lm 

m 

rn



PAGE 234 

Aqua Utilities Florida, Ine - Breae Hin 

Adjushnent to Operatiug Income 

Test Year Ended 4RW10 

OwrationandMaintcnao rnExDulsC 

TypeAAppmvedSti@atkm. 


Reflect effect of additional AAJ customar. (Jss3lc 16) 

Rfflect appqri& --arpenses.(rssue17) 

Remove Cxdve mmtivc canpen& 'on. (Jss3lc19) 

Reflect amount of salaries & wages. (Issue 20) 

Reflect appmpnate ' amount of bad debt expense. (kue21) 

Re&%tapprOpnate . amount of late case orpcnsc. (rssue 22) 

Total 

Deondation~ - Net 

1 Type A Approved Stipnlatims. 

2 Reflecttbeappropnate . munt of pm forma pmjects. (Issue 3) 

3 To move net depreciation on nou-U&U djnsbnent above. (Issues 4 tbmugh 7) 

4Appmpnate ' afhliatballosation plaot costs (Issue 18) 

Total 

&nGltimtim-othe.rExDense 

AppropriatCRe~Assd~ssue38) 

1 

Taxa Oma Than Income 

RAFs on revenue adjusbn- above. 

2 Renectmeapplopnate ' amount ofpm forma projects. (Is : 3) 

3 

4 

Refkt appropriate uou-U&U property taxes. @sues 4 bugh 7) 

Rdlectanrespondm . gpayroutaxesonsalaries&~adjusbnenr (rssIlC20) 

Total 

ScbedukNa 4-C 

Doeket No. 100330-ws 

($36.321) 

517 

& 

($101) 

0 

0 

@@I 

lsepm 

($1,611) 

0 

0



PAGE 235 

Atpa Utilitks Plorldq IUC. - B~CCZC Hin 


Base Facility Cbarge by Mctez Si: 

5B" x 314" 

314" 

1" 

1-1/2" 

2- 

3" 

4" 

6" 

8" 

10" 



GallonageQlargcRSTi'Ihrce 


Iniestion 

Base Facility charge by Meter Si: 

518" x 314" 

314" 

1" 

1-1n. 

2" 

3" 

4" 


Gallrmage Cbarge Ti two 

Gallonage Charge Tia tbree 

PrivateFircProteetion 

BaseFacility Charge by Meter Si: 

2" 

3" 

4" 

6" 

8" 

10' 

3,000 Gallom 

5,Ooo Gallons 


$15.51 

$2327 

$38.11 

$7753 

$124.06 

$248.11 

$387.68 

$77537 

$0.00 

$0.00 

$2.70 

$2.70 

$2.70 

$2.70 

$15.51 

$1551 

$1551 

$1551 

$1551 

$1551 

$1551 

$2.70 

$2.70 

$2.70 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$26.79 

$4020 

$66.97 

$133.92 

$21429 

$428.57 

$669.65 

$1,33932 

$0.00 

$0.00 

$4.66 

$4.66 

$4.66 

$4.66 

$26.79 

$26.79 

$26.79 

$26.79 

$26.79 

$26.79 

$26.79 

$4.66 

$466 

$4.66 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$882.78 

$1,412.44 

$2,03039 

$6.49 

$9.73 

$1298 

$6.98 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$6.49 

$9.73 

$12.98 

$11.77 

$23.54 

$36.78 

$73.57 

$117.70 

$16920 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$41925 

$958.50 

$1,533.60 

$220455 

$6.55 

$9.83 

sl3.10 

$735 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$655 

$9.83 

$13.10 

$12.78 

$25.56 

$39.94 

$79.88 

$127.80 

$183.71 

Twbl Residential Bilb 5M" I 3/4" Meter 

$23.61 $40.77 $37.13 $38.82 

$29.01 $50.09 $50.11 $51.92 

$42.51 $7339 $95.52 $97.79 

Schdnle Na S A 

Docket Na 100330WS 

$0.91 

$137 

$228 

$4.55 

$723 

$1456 

$22.75 

$4551 

$72.81 

$104.67 

$0.31 

$0.47 

$0.62 

$035 

$0.91 

$1.37 

$228 

$4.55 

$728 

$14.56 

$22.75 

$0.31 

W.4? 

$0.62 

$0.61 

$121 

$1.90 

$3.79 

$6.07 

$8.72 

$0.63 

$0.95 

$1.58 

$3.16 

$5.06 

$10.13 

$15.82 

$31.64 

$50.63 

$7278 

$022 

$032 

$0.43 

$024 

$0.63 

$0.95 

$1.58 

$3.16 

$5.06 

$10.13 

$15.82 

$022 

$032 

$0.43 

$0.42 

$0.84 

$1.32 

$1.64 

$422 

$6.07



PAGE 236 

Aqua Utilitkr Florida, he - Bream Hin 

Wastewater Monthly Service Raw 

Tat Year Ended 4/30/10 

Base Faciliry Charge All Mcter Si: $19.04 $39.02 

Gauonage charge - Pa 1,000 

gauotls (6,000 gsuOn cap) 

Genmlscrviee 

BaseFaciliry Chargeby MctaSize: 

518" x 314" 

314" 

1" 

1-in" 

2" 

3" 

4" 

6" 

8" 

10" 

Gallonage charge, pa 1 ,Ooo Gallom 



FlatWGeneralSaviCC 

~euse per sprinkla ncad 

$339 

$19.04 

$28.57 

$4759 

$9521 

$15234 

$304.70 

$476.02 

$952.05 

$0.00 

$0.00 

$4.05 

NIA 

NIA 

NJA 

$6.95 

$39.02 

$58.55 

$9752 

$195.10 

$312.17 

$62439 

$975.46 

$1,950.94 

w.00 

$0.00 

$830 

NIA 

NIA 

NJA 

$37.87 

$9.53 

$37.87 

Sb.81 

$94.68 

$18936 

$302.97 

$605.94 

$946.78 

$1,89357 

$3,029.70 

$4,355.20 

$11.43 

$73.91 

$475.78 

$0.50 

mid Residentid Bills 5/8" I 3/4" Meter 

3,000 Gallons $29.21 $59.87 $66.46 $60.96 

5,000 Gallons $35.99 $73.77 $85.52 $78.68 

l0,oOo Gallons $39.38 $80.72 $95.05 581.54 

(Wastwatm Gallonage Cap - 6,000 

Galla) 

$34.38 NIA 

$8.86 ' NIA 

$34.38 NIA 

$51.57 NJA 

$85.95 NIA 

$171.90 NIA 

$275.04 NIA 

$550.08 NIA 

$85950 NIA 

SL719.00 NIA 

Q7S.40 NIA 

$3953.70 NIA 

$10.63 NIA 

NIA NIA 

NIA NIA 

NIA NIA 

sehedok No. 5-B 

Docket No. 1003M-WS 

$1.13 

$029 

$1.13 

$1.69 

$2.82 

$5.64 

$9.02 

$18.04 

$28.19 

$5637 

$9020 

$129.66 

$035 

NIA 

NIA 

NIA



PAGE 237 

Seheddok of Water Rate Base 

Test Year Ended u3onO 

$748337 sso,oos 

27,737 0 

0 0 

(89.576) (18230) 

(562,950) 0 

134,937 0 

&zsL?i%- 

9sSz2 

..c 

S798343 (S10.888) 

h k d Na 100330.WS 

27,737 0 

0 0 

(107.806) 935 

(562950) 0 

134,937 0 

sSz2(5.786) 

s2E?&z-



PAGE 238 

Scbednk No. SB 

-No. 100330-WS



PAGE 239 

Aqua Utilitks Florida, Inr - Fninrays 

Adjoshnents to Rate Bme 

plantklnservice 

TypeA Apvd stipnlations. 

Refleatheappropnate ’ mom of pm folma projects. (Issue 3) 

APPmpriatc &Xae-dl- 

Total 

plant costs m e 18) 

Nm-used and Useful 

To refled net MLposed ami usem adjustment (Issues 4-7) 

~ c a l m ~ ~ r n 

TypeAApprovedStipuMons. 

Reil&theappropnatc . amount of pro forma projects. (Issue 3) 

AppmPniate aftiliataallocstirn plant wsk. @SUe 18) 

Total 

WorliinecaO ilal 

Type A A pved stipulations 

To amortirC Phase I Mwitoring Plan Costs. (Issue 1) 

Reflect appropde deferred mte case expense. @sue 8) 

Total 

Sehednk No. 3-C 

Docket No. 10033QWS



PAGE 240 

Aqua Utilities Florida, Infi - Fairnays 


1 Operating Revenuu: 


2 operation&Me 




6 IncomeTaxes 




~ $ z Z n u $ 2 0 9 . 3 0 1 XUm ~ ~ ~ 

31.96% 

$83,654 $13,759 $91,413 ($21,516) $15,897 $15,891 

5,982 8,479 14,461 (4,013) 10.448 10,448 

3,340 0 3,340 0 3,340 3,340 

51,630 3,376 55,006 (3,571) 51,435 1,937 53,371 

fxLZ9D ml.L!2mww D 

141l24w-wwm L%lz 

8 Operating Income &2Jmluu!?!l&2L282$&Q!L2m~~ s2uu 

9 RateBass ll22Ua KiUm fiLwa 4aZua 

10 Rate of Return u.& La% -u LW



PAGE 241 

Aqua Utilltles Florida, Inc. -Fairways 

Statement of Wastewater Operatloxu 



1 Operatlng Revenues: sE?&lm $l.%LzlIs114.8281 WW $.um 

125.33% 

Operating Expenrw 

2 Operation & Maintenance $87,349 $7,768 $95,117 ($7,915) $87,202 $87,202 



5 Taxa Other Than Income 

6 InoomeTsxw 



9 RateBase 


33,898 4,321 38,219 (1,547) 

7,820 0 7,820 0 

36,672 36,672 

7,820 7,820 

4,706 5,987 10,693 (5,272) 5,421 4,537 9,958 

l2u.Bau12821!~uzeev= 

m w - ~ m m m

1 

2 

1 

2 

3 

4 

5 

6 

7 

8 

1 

2 

3 

4 

1 

2 

3 

4 



PAGE 242 

Aqua Utilitia Florida, Inc - F h y s 

Adjustment to Operating hwme 

Revenues 

Removenquestcdwrnrmueincrcase. 

Reflectappmpnate . m o l l n t. o f nnrmes. ~ (Issue15) 

Total 

OwatiOnandMaintcnan CCEXDense 


ToamorthPhsSc IMonaoring Plan costs. (Issue 1) 

Re~~ofadditionalAAIcustomas~16) 

Reflect appropnatc . affiliatball0cationQ. (Issue 17) 

Remove executive incentive Compensaton. @sue 19) 

Reflect amount of salaries Bt W ap. (Issue 20) 

Reflect appmpriate amount ofbad dcbtexpensc. (Issue 21) 

Reflect appmpnate . amolmtofratecascexpense.@sue22) 

Total 

DeDleciarionExDcnse -Net 

Type A App~~vcd Stipolatmns. 

Reflect the appropriate amount ofpro forma projects. @sue 3) 

To move net depreciation on non-U&U adjustment above. (Tssues 4-7) 

Appropriate a5kteeXocation plant costs. (Issue 18) 

Total 

.. Amo~on-OmaEweOw 

ApproPriate Reg~~latory Asset (ruue 38) 

Taxes Omer Than Income 

RAFs on revenue adjustme& above. 

Reflect the appropriate ' amount of pm torma projects. (Issue 3) 

Reflect appmpnate 

' non-UbU propary taus (IsSueJ 4 through 7) 

Reflect comsponding payroll taxcs on salaries & wages adjustment (ruue 20) 

Total 


Docket No. 100330-WS



PAGE 243 

Utilitia plod& Ine - FniRwys Schednle No. SA 

Water Monthly Servife Rstrs 

DoeltetNo. Io(uJo-WS 

Tcst Year Ended W O 

Residential. Ceocnl Service amd Multi-Famih 

Bape Faciliry Charge by Mets Si: 

518" x 314' 

314" 

1" 

I-1R" 

2" 

3" 

4" 

6" 

8" 

10" 



Gallonage Charge RS Tier 'Ihrec 


518" x 3/4" 

1" 

1-10" 

2" 

3" 

4" 

Gallonage Cbaxge Tier one 


Gallouage. ChargeRerlhree 

Gallonage Charge Tia bur 

Private Fue Protection 

Base Facility Cbargeby MetaSiZe: 

2" 

3" 

4" 

6" 

8" 

10" 

3,000 Gallons 

5,000 Gallom 


$759 

$7.59 

$7.59 

$759 

$759 

$759 

$759 

$759 

$759 

$7.59 

$1.77 

$1.77 

$1.77 

$1.77 

$7.59 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$1.77 

$202 

$2.53 

$3.03 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

IlOdS 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$2.49 

$2.49 

$2.49 

$2.49 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$10.68 

$2.49 

$2.84 

$3.56 

$428 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$17.66 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$882.78 

$1,412.44 

$2,03039 

$6.49 

$9.73 

$12.98 

$6.98 

$26.48 

$39.72 

$44.14 

$8828 

$141.24 

$282.49 

$44139 

$6.49 

$9.73 

$1298 

$0.00 

$11.77 

$23.54 

$36.78 

$73.57 

$117.70 

516920 

$18.57 

$27.86 

$46.43 

$92.85 

$148.56 

$297.12 

$46425 

$928.50 

$1,485.60 

$2,135.55 

$333 

$5.84 

$8.76 

$4.64 

$18.57 

$27.86 

$46.43 

$92.85 

$148.56 

$297.12 

$46425 

$333 

$5.84 

$8.76 

NIA 

$12.38 

$24.76 

$38.69 

$77.38 

$123.80 

$177.96 

h i d Residential Bills 51%" I 3/4" Meter 

$1290 

$16.44 

$2529 

$18.15 

$23.13 

$3558 

$56.60 

$82.56 

$9552 

W.56 

$35.22 

$61.91 

NIA 

N/A 

N/A 

N/A 

WA 

N/A 

NIA 

N/A 

N/A 

N/A 

N/A 

NIA 

N/A 

NIA 

N/A 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

N/A 

NIA 

N/A 

NIA 

NIA 

N/A 

NIA 

WA 

$0.62 

$0.93 

$1.55 

$3.10 

$436 

$9.92 

$1551 

$31.01 

$49.62 

$7133 

$0.11 

$020 

$029 

$0.15 

$062 

$0.93 

$1.55 

$3.10 

$4.96 

$9.92 

$15.51 

$0.11 

$020 

$029 

N/A 

$0.41 

$0.83 

$129 

$258 

$4.13 

$5.94



PAGE 244 

Aqm Utilities Florida, Inf - Fairways 

Wastewater Montbly Service Rates 



Docket No. 10033O-WS 

Residential 

-Facility Charge AnMetcr Si: Sl2.65 $28.58 $37.87 $3438 NIA $1.15 

Gallonage Charge - Per 1,000 

gallons (6.000 gauOn cap) 

hem1 Service 

BaseFad)ityCbingebyMcterSkc: 

5f8" x 314" 

314" 

1" 

I-lP 

2" 

3" 

4" 

6" 

8O 

10" 

Gullonage Charge, pa 1,000 Gallons 


FlatRateResidential 

FlatRateGenaalServicC 

ReuscperS~erHmd 

3,000 Gallons 

5,000 Gallons 


(Wa&waka Gall- Cap - 6.000 Gallom) 

$3.80 $8.59 

$1265 

$12.65 

$12.65 

$12.65 

$12.65 

$12.65 

$12.65 

$12.65 

$12.65 

$12.65 

$28.58 

$28.58 

$28.58 

$28.58 

$28.58 

$28.58 

$2858 

$28.58 

$28.58 

$2858 

$9.53 $8.86 

$37.87 

$56.81 

$94.68 

$18936 

$302.97 

$605.94 

$946.78 

$1,893.57 

$3.029.70 

$4,35520 

$3438 

$5157 

$85.95 

$171.90 

$275.04 

$550.08 

$859.50 

$1,719.00 

$2,750.40 

$3353.70 

$3.80 $8.59 $11.43 $10.63 

NIA . NIA $73.91 NIA 

NIA NIA $475.78 WA 

NIA WA $0.50 NJA 

TWW Residential Bilk Ye" I 3/4" Meter 

$24.05 $5435 $66.46 $60.96 

$3 LIS $71.53 $8552 S78.68 

$35.45 $80.12 $95.05 187.54 

WA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NJA 

NJA 

hVA 

NIA 

WA 

NIA 

NIA 

$030 

$1.15 

$1.72 

$2.87 

$5.74 

$9.19 

$18.37 

$28.71 

$57.41 

$91.86 

$132.05 

$036 

NIA 

NIA 

NIA



PAGE 245

ORDERNO. PSGIZ-OIM-FOF-WS 


PAGE 246 

Docket No. 1oo33o.WS 

$210,236 $9,745 $219981 ($1,227) $218,754 

18,634 0 18,634 0 18,634 

0 0 0 0 0 

01.519) 0352) (um) 46 

(1,817) 0 (1,817) 0 (1.817) 

39 0 39 0 39 

- 0 m mQ2I



PAGE 247 

A- UlatedDemKC iatim 

1 

2 

?LpeAAppmvedStipulations 

Rcflcdtheappropnate . amount of pro f m pmj&. (Jssne 3) 

3 ApproPriate~ate-aUdnplant~. (Issue 18) 

Total 

($501) 

27,099 

1829) 

&2%352

0 

4 ; 

€4



PAGE 249 

Aqua Utilltles Florlda, Inr - Peace River 




2 opaation&Maintenance 


4 Amortizntion 


6 IncomeTaxes 


8 Operating Incone 

9 RPteBase 

10 RateolReturn 

IWdl.2- 

$51,949 $1,076 

8,750 1,652 

0 0 

2,712 6,199 

eadl2228 

mi2LL.U 

2izuU 

&uzl 

32% 

$59,025 ($4,740) 

10,402 (646) 

0 0 

8,911 (1,165) 

H 9 8 e m 

uw 

u2QP.rslassv 

a2uU 

Lim 

sl9.m 

$54,285 

9,756 

0 

7,146 

La2 

12eBp 

m 

ui4% 



u.934 BXLu 

20.09% 

$54,285 

9,756 

0 

717 8,463 

533 zeaa 

w l!!m 

wit2 suL6e6 

$u&M 

Lm



PAGE 250 

Aqua Utilities Florida, he - Peace mer 

Adjustment to Operating hwme 

1 

Revenues 

~vereqDestedfinalrcvmIleimrease. 

2 Reflectapproprate . mount of BrrrmallzDd . revenues. @.sue 

Total 

15) 

1 

ODeration and Maintenance Exoense 

TypeAApprovcdStiplllarions. 

2 ToamortizcpheseIM~PlancoStr(ISSUC1) 

3 Reflect e m of additional AAI customrax (Issue 16) 

4 appropriate a8Sliatc-aUoeation cxpenss. (Issue 17) 

5 ~vcexefntrv ’ cinccntivecompem& ‘on. (Isme.19) 

6 Re5ectamountofsdaries8iwages (Issuc20) 

7 Rdlcctappropnafe ’ amountofbaddebtcxpensc.(Tssuc21) 

8 mapppmte ’ mom of rate case expaLse. (Issue 22) 

Total 

DermciationExDense - Net 

1 m e A Approved Stipdatious. 

2 Reflecttbeappmpnatc 

3 

4 

. amouut of pro foma projects. (Issue 3) 

To move net depreciation on non-U&U adjustment above. (Issues 47) 

Appropriate &hte-aUdonplaut costs. (Issue 18) 

Total 

Taxes other lbuhcome 

1 RAFs on revenue adjustments above. 

2 Reflktt6eappropnare . amom ofpro forma projects. (Issue 3) 

3 Reflect swropriste n~n-UdtU Pmpagr taxes. (Issues 4 through 7) 

4 Reflectcumjmiq . payroll taxes on salaries &wages adjustment (Issue 20) 

Total 


Deck& No. lwu3O-WS


DO(SKET NO. 100330-WS 

PAGE 251 

Aqua Utilities Florida, Inc - Peace River 

Water MonMy Service Rates 

Test Year Ended BDollO 

Residential. General Serviec and Mnlti-FamiIy 

Base. Facility charneb - . Meter Size: 

5/8" x 314" 

3/40 

1" 

I-1R" 

2" 

30 

4" 

6" 

8" 

10" 

Gallonnre Chuee. ne r 1.OOO Gallons 



Gallonage Charge RS Tier Three 

Gallonage Charge, GS 

Base Facility Chargc by Mcter Size: 

518" x 314" 

314" 

1" 

I-1R" 

2" 

3" 

4" 

Gallonsge Chge Tione 


Gallonage Charge Tier three 

Private Fue Protstmo 

Base Facility Ckirgc by Mefcr Size: 

2" 

3" 

4" 

6" 

8" 

10" 

$16.44 

$2466 

$41.10 

s82a 

$13152 

$263.03 

$410.99 

$821.97 

$1,315.16 

$1,890.54 

$4.94 

$6.17 

$14.81 

$6.05 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$10.96 

$21.92 

$3425 

$68.50 

$109.60 

$15755 

$20.02 

$30.04 

$50.06 

$100.12 

$16020 

$32038 

$500.60 

$1.001.19 

$1,601.91 

$2,302.75 

$6.02 

$7.52 

$18.04 

$737 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$1335 

$26.70 

$41.72 

$83.44 

$13350 

$191.90 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$282.49 

$44139 

$882.78 

$1,412.44 

$2,030.39 

$6.49 

$9.73 

$12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$8828 

$14124 

$28249 

$44139 

$6.49 

$9.73 

$12.98 

$11.77 

$23.54 

$36.78 

$73.57 

$117.70 

$16920 

$19.17 

$28.76 

$47.93 

$95.85 

$15336 

$306.72 

$47925 

$958.50 

$1.533.60 

$2204.55 

$6.55 

$9.83 

$13.10 

$735 

$19.17 

$28.76 

$47.93 

S95.85 

$15336 

$306.72 

$47925 

$6.55 

$9.83 

$13.10 

$12.78 

$25.56 

$39.94 

$79.88 

$127.80 

$183.71 

TMid Residential Bilk 98'' I 3/4" Meter 

3,000 Gallons 

5.000 Ganons 

10,m Gallons 

$34.59 

$46.69 

$71.99 

$42.13 

$56.87 

$87.~ 

$38.60 

fS2.56 

$95.52 

_._ $38.82 ._ 

$5 1.92 

$97.79 

Seheduk Na 5-A 

Docket Na lOOuDWS 

$0.93 

$1.40 

$233 

$4.65 

$7.44 

$14.88 

$2325 

$46.51 

$74.41 

$106.97 

$032 

$0.48 

SO.@ 

$0.36 

$0.93 

$1.40 

$233 

$4.65 

$7.44 

$14.88 

$2325 

$032 

$0.48 

$0.64 

$0.62 

$124 

$1.94 

$3.88 

$620 

$8.91 

$028 

$0.42 

$0.71 

$1.41 

$226 

54.52 

$7.06 

$14.11 

$22.58 

$32.45 

$0.10 

$0.14 

$0.19 

$0.11 

$0.28 

$0.42 

$0.71 

$1.41 

$226 

$4.52 

$7.06 

$0.10 

$0.14 

$0.19 

$0.19 

$038 

$0.59 

$1.18 

$1.88 

$2.70



PAGE 252 

Aqua Utilities FloElorida, he. - PaeC River 

Wmstcwatcr Monthly Service Rates 

Residential 

BaseFe Charge All- S k $29.03 $33.04 $37.87 

$8.87 

$29.03 

$43.55 

$72.58 

$145.17 

$23227 

$46454 

$725.84 

$1,451.68 

$2,322.70 

$3338.87 

$10.64 

NIA 

NIA 

NIA 

$10.09 $9.53 

$33.04 $37.87 

$49.56 $56.81 

$82.60 $94.68 

$16520 $18936 

$26432 $30297 

$528.64 $60594 

$826.00 $946.78 

$1,651.99 $1,89357 

$2,64320 $3,029.70 

$3,799.59 $4,35520 

$12.11 $11.43 

N/A $73.91 

NIA $475.78 

NIA $0.50 

$3438 

$8.86 

$34.38 

$51.57 

$85.95 

$17190 

$275.04 

$550.08 

$859.50 

$1,719.00 

$2,750.40 

B3,953.70 

$10.63 

NIA 

WA 

NIA 

Tvoical Residential BiIls 51%" I 314" Meter 

3,000 Gallons $55.64 $633 1 $66.46 $60.96 

5,000 Gallom $73.38 $83.49 $85.52 $1868 

10,000 GaUoD.9 $82.25 $93.58 $95.05 . $87.54 

Gallonage Cap - 6,000 Gallons) 

Schedule Na 5-B 

Doeket No. 10033&WS 

N/A 

WA 

NIA 

NIA 

NIA 

NIA 

NIA 

WA 

WA 

N/A 

NIA 

WA 

NIA 

NIA 

NIA 

NIA 

$0.55 

$0.14 

$0.55 

$0.83 

$1.38 

$2.76 

$4.41 

$8.82 

$13.78 

$27.55 

$44.09 

$63.38 

$0.17 

NIA 

NlA 

WA

ATTACHMENT B

BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION 

DOCKET NO. ioO33O-WS 

ORDER NO. PSC-I 2-0259-FOF-WS 

ISSUED: May 29,2012 

The foilowing Commissioners participated in the disposition of this matter: 

BY THE COMMISSION: 

RONALD A. BRIE&, Chairman 

LISA POLAK EDGAR 

ART GRAHAM 

EDUARDO E. BALBIS 

JULIE i. BROWN 

ORDER GRANTING AUF’S MOTiON FOR RECONSIDERATION 

AND RECONSIDERING AND CORRECTING ERRORS 

1. BACKGROUND 

On September I, 2010. Aqua Utilities Florida, Inc. (AUF or Utility) filed an application 

for approval of an increase in rates for both its water and wastewater operations The Utility 

requested chat this rate application be processed using the Proposed Agency Action (PAA) 

procedures. 

Pending our decision on final rates, AUF requested interim rates. By Order No. PSC-IO- 

0707-FOF-WS (Interim Rate Order), issued November 29,2010, in this docket, we approved an 

interim revenue requirement designed to generate annual water revenue of $9,062,892, an 

increase of$1,125,588’ or 13.19 percent, and wastewater revenue of $5,391,338, an increase of 

%600,215* or 1 1.81 percent. 

During the processing of AUF‘s requested rate increase. the Office of the Public Counsel 

(OPC), the Office of the Attorney General (AG), YES Companies, LLC dh/a Arredondo Farms 

(YES), Mr. David L. Bussey (Mr. Bussey), Ms. Lucy Wambsgan (Ms. Wambsgan), and Pasco 

I 

Of the total approved interim water revenue increase of $1,125,588. we altowed $529.922 to be collectd though 

interim rates and deferred the remainder as 8 regulatory asset. 

’ Of t!x total approved intenm wastewater revenue increase of $bo0.215. we allowed f310.WI ro be colleclcd 

through interim rates afid deferred the remainder as a regulatory asset. 

’ -,I. : , , ., ,

w R NO. PSC-12-0259-FOF-WS 

DOCKET NQ. 100330-WS 

PAGE 2 

CoUlmty intervened in this d&et. However, Mr. Bussey and Ms. Wambsgan subsequently 

WinMreWtheir i&dan, The original five-manth stahrrory deadline for us to vote on PAA action was March 14. 

20.1 I. By letter da@ November 1 ?, 2010, AUF waived the time to vote through May 24,201 I, 

aml we voted an thc Wity’s requested ratk increase on thar date, and issued Order No. PSC-I I - 

0256-PAA-WS (PAA Order)’ on June 13,201 1. Timely protests and cross-petitions of portions 

ofthe P a Order were filed. 

Pendiog tkyeresQlutionor‘@G’2e&ptens, AUF provided notice of implementation of PAA. 

rates subject tu refund wirh on Jufy I. 20.1 1. By Order No. PSC-II-0336-PCO-WS. 

issued Au@ IO, 201 I, we aebw1edge.d the implementation ofthe PAA rates. 

Pursuant to Order No. PSC-I I-0309-PCO-WS (Order Establishing Procedure), issued 

July 25, ‘201 I, the pratests and ems-petirions of the PAA Order were schedul.ed For foml 

.hearing! Ten service hearings wen held throughout the state,’ and the technical hearing was 

held on November 29 and 30..and December 1 and 7,201 1. 

Subsequent to the close of the whnical hearing, all parties fikd briefs. Thereafter, on 

F&~niary 14, 2012, upon considemtion of the evidentiary record, the post-hearing briefs of the 

parties, and our staffs renrrmnendatian, we issued Order No. PSC-12-0102-FOF-WS (Final 

Order), granting AUP an increase ia its rates and charges to generate $3.8 million in additional 

gross annual revenues. 

On March 20, 2012, AUF timely tiled a Motion for Reconsideration (Motion), pointing 

out several perceived scrivener’s errors and mistakes of fact or law in the Final Order. AUF did 

not request oral argument .M its motion. Also, the lntervenors did not file a response to AUF’s 

Moiion. 

Finally, on April 17, 20012, in addressing a customer complaint, our staff discovered an 

apparent allocation error bf the revenne requirement within Wastewater Rate Band 2 in the Final 

Order. This appareat allocation ermr caused the rates in Westewater Rate Band 2 to be 

improperly calculated withsome w%st&vi?er mstmers being charged more than was appropriate 

and others being charged less. 

1 

Although Order No. PSC-II-0256-PAA-WS. was primarily a PAA Order, as final agency action, we closed 

Docket No. 080121-WS. Also, although AUF’s Chuluota system was no! a pan of the rate proceeding in Docket 

No. 100330-WS. we determined that any quality of service problems related to the Chuluota water and wastewater 

systems would bc considend in Docket No. 100330-WS. 

4 

Order No. PSC-11-0544-PHO-WS (Prchearing Order), issued November 23, 2011. sn forth the agreements 

reached by the parties and the decisions of the Prchearing Officer for purposes of the formal hearing. The 

hehearing Orda also set out the ‘issues in dispute and the issues dcemed stipulated pursuant to Section 

120.80(13)(b). F.S. 

Sewice Hearings WCIC held in Greenacre8 (August29.2011): North FI. Mym (August 30.201 1); kbring (August 

31, 201 1); Oviedo (September I. 2011); Grinesvilie (September 12. 201 I): Palarka (September 13. 201 I), Eustis 

(September 13.201 I); Chipley (September 16.201 I); New Port Richey (October I I. 2011); and Lakeland (Ociober 

I2,2ali1.

OmER NO. ‘l%C-l2-U259-FOF-WS 

lXK%ET NO. 10@3.3%U’S 

PAGE 3 

This Or& add- AUF‘s Motion for Reconsideration and the improper allocation of 

the revelrue requirement w& Waswvukr h e Band 2, with the resulting incorrect rates. We 

have jwisdicth ovet the nuctkr pwslianr to Sections 367.8I11 and 367.082. Florida Statutes 

(F.S.). 

-N 

11. Arm3 

The Wdwd of revh in a Wh b r%ausideration is whethex the motion identifies a 

mi*C of fect or hv, or a pohi of fact M law which was overlooked or which we failed to 

wastder k? rrtndcriag our Final orda. @eranut Fk?nded Wanhollse Inc. v. Bevis, 294 So. 2d 3 I5 

(I%. 1974); -g 146 So. 2d 889 (Ha. 1962): and Pinxree v. Ouaintance. 

394 SO. 2d 161 (Fla 1st DCA 1981). Inamorion for reansideration. it is not appropriate to 

reargue mmms that have already bwn considered. Sherwood v. State, 11 I So. 2d 96 (Fla 3d 

DCA 1959), c&% SSa@ tx, ret h@ex R&v Ce. v. IM So. 2d 817 (Fla 1st DCA 

1958). 

As noted, AUF timely Gied Us Motion for konsidaration of portions of the. Final Order. 

In its Motion, I listed th fkillowing perceived mors, miscalculations. mistakes of fact or law. 

and scriwmer‘s e~ws: 

A. Rate Reduction for Expiration of Amortization of Prior Rate case Expense 

1. Corrections Needed Relating to the “Across-the Board Decrease” for 

*w Water Band 2; and 

E. 

2. Additkd CorrecZions Needed for the “Acrossthe-bard Decrease” 

for New Water Bands 1 & 2, and New Wastewater Rate Band 2 

Regulatory Asset for the Interim Deferral 

C. 

D. 

I. New Water Rate Band 2; 

2. New Wastewater Rate Band 2 

Scrivener’s Enor in Interim Refund Calculation 

PAA Refund Cal~ulation Error 

E. 

Repression Adjustment to New Water Rate Band 2 

F. Posl-Repression Revenue Requirement 

G. Miscellaneous Tpppl~ical Errors ’ 

The Inteivenors did not filc any mponses to AUF’S Motion. Each of the above-listed 

categories will be set out below with a briefsummary ofthe Utiliry’s Argument and our Analysis 

and Conclusion following.

ORDER NO. PsC-I2-oILS9-FOF-WS 


PAGE 4 

A. Rate Rcdwtiofi for Exdration of Amortization of Pfior Rate Case ExDense 

I. Co&ons Relating to fhe "AGrOs-the Bod Decrease" for New Water Band 2 

a. AW* &m me@ 

4UF mfes mOt the table e n g an page 164 of the Final Order sets forth the "Acrossfhi? 

hfd DecreaSe" pencentages that wdd wly to the new ra& bands starting on April I, 

2513, Prhm the four-year amortkathm period expires. In rnakirlg those calculations, AUF notes 

that we used the annual revenue requirement fa each of the old water and wastewater rate bands. 

However. for the new Water Rate Bad 2, AUF states that we inadvertently used the revenue 

reqwirement for old Wastewater Rate Band 1 as the entry for old Water Band 4. AUF states that 

the Correct revenue requirement fur oid Water Rate Band 4 is $4,807,804 and not $462.1 87 (see 

Water Rate Band 4, Schedule 4-A, an page 224 of Final Order). With this correction, AUF 

states that the "Across-the Board De-e" percentage for new Water Rate Band 2 would be 

2.33 percent and no! 5.83 percent. 

We a pe with the Utility. The table on page 164 shall be corrected to show an approved 

revenue requirement of $4,807,804 for old Water Rate Band 4. The figure of $462.187 is the 

revenue requirement for the old Wastewater Rate Band 1 (and now new Wastewater Rate Band 

I), which was inadvenemly lefi blank. Further, the revenue requirements for old Wastewater 

Rate Bands 2 and 3 were idvemntly lefi blank and should have reflected revenue requiremenls 

of $3,572,176 and $894,944, respectively. The abovc-noted errors wen the result of cell 

formula reference errors in our staff's Excel spreadsheets, and as such, these scrivener errors 

shall be comcted. With this first correction, the across-the-board decrease percentage for new 

Water Kate Band 2 would be 2.33 percent and not 5.89 percent. Further, in Section A.2., 

immediately below, AUF arguues that a second correction is required which would further reduce 

the 2.33 percent figure. AUF notes tha! in calculating the appropriate rate case expense 

reductions, we improperly excluded the revenue requirements fmm the Breeze Hill, Fairways. 

and Peace River systems. This argument isdiscussed immediately below. 

2. Additional Corrections Needed for the "Across-he-Board Decrease" for New Water 

Bands 1 & 2, and New Wastewater Rate Band 2 

a. AUF's Armment 

AUF notes that the approved capband rate structure contemplates a uniform rate structure 

within each band. AUF argues that to calculate the appropriate rates, the revenue requirements 

for all individual systems within a band are totaled to create an aggregate revenue requirement 

for the band. Further, AUF states that the annual rate case expense amortization amounts for all 

systems within each rate band must be included in the calculation of each band's "Across-the 

Board Decrease" percentage. and then included in Tables 25 and 26. AUF argues that in the 

table on page 164:

1. 

2. 

3.

.. 

,. ,. 

.. ' > . 

. . 

. 

. . 

. .. 

~. ,

DMxErNU. IO[pfM-WS 

PAGE 7 

Based on acms-ahbboard decreaas. &e rate ductions effedve 85 o€ March 

31, 2013, fm &e IW O%SC expense tqprowd in r)odrst No. ~121-WS far water atid 

WastewarerTWt were &awn on Piml order T& 25 and 26. respctively, shall be replaced by 

Tables 2 and 3 &elow. 

ilk x 344" 

Gcn. %Ace kgal chg: 

Prime Fin proactlon 

BFC by Mmr Size 

2" 

3" 

4" 

6" 

8" 

IO" 

. . 

+voicpI Wd!a&&€m 

3.000 galions 

5,000 gallons 

lO.eo0 @lorn 

Xias? 

s27.86 

w.43 

$92.85 

$148.56 

$297.12 

546425 

14t8.50 

$l&.Sa 

S3.135.55 

$3.33 

$5.64 

S8.76 

S4.64 

SfZ3 

S24.76 

$38.69 

$77.38 

5123.80 

$177.96 

$28.56 

535.22 

$6191 

Table 2 

sQS% 519.17 

SOBS $28.76 

SlA6 s47.93 

$2.92 $95.85 

54.68 3153.36 

E9.35 €306.72 

514.62 s479.25 

529.23 $958.50 

M.77 $1.533.60 

E6723 S2.204.55 

W.10 

10.18 

$0.18 

$0.15 

$0.39 

s0.n 

$1.22 

s2.44 

$3.90 

$5.60 

$0.90 

$1.1 I 

$1.95 

- s6.55 

39.83 

$13.10 

57.35 

$12.78 

f25.56 

539.94 

579.88 

S 127.80 

$183.71 

$38.82 

$3 1.92 

$97.79 

(I) Rate Band I iacludes OM Rak Bwd I and Foirwayr. 

(2) Rate Band 2 includes old aar0 Band 2.3, and 4. as well as Bmze Hill and Peace River. 

so 44 

EO;& 

$1.09 

$2.19 

53.50 

56.99 

$1093 

$21.85 J 

534.96 . 

$50.26 

W.15 

5022 

W.30 

$0 17 . 

$0.29 

so 58 

$0.91 

51.82 

$2.91 

54 19 

50.88 

SI I8 

$2.23

B6E - AB MMcr s i 523.1 I 

Ocneral Savi, 

5/8' x 314" 

yi' 

1" 

I la" 

1" 

3" 

4" 

6" 

8" 

IO" 

Twiieal Rcsidmtia( Bills 

3MO gallons 

&om gauons 

I0.m gallms 

(Wastewater Gallonage Cap 

$7.8 I 

m.11 

Ms7 

S57.78 

SI 15.55 

blW.88 

SM9.76 

sn.75 

fl.lS5.50 

S 1.848.80 

S2.657.65 

w.37 

640.46 

WA 

WA 

NIA 

NIA 

NJA 

50.n 534.66 $0.57 $17.89 w.61 

93.26 $8.93 so. I5 57.84 50.07 

w.7? 

$1.15 

$ I .91 

$3.9) 

$6. I2 

$12.25 

519.14 

$38.27 

W.23 

sw.02 

534.66 

s5 I .99 

$365 

$m3o 

$277.28 

3554.56 

S866.M 

5 1.733.0 

s2.m 80 

$3,985.90 

$0.57 

w.45 

$1.42 

$2.84 

$4.55 

S9.09 

$14.21 

S28.42 

$45.47 

565.36 

., $77.89 

SI 16.84 

'$194.73 

$389.45 

S6U.IZ. 

b 1246.24 

s 1,94725 

23.894.50 .' 

E623 1.20 

Ts.9i7.35 

50.67 

51.0r 

Sl,.68 

$3.56 

$5.38 

$10.75 

516.80 

$33.61 

$53.77 

$77.29 

m-3 1 fl&R SI18 $9.4 I $0.08 

SI34 NIA . WA WA NIA 

NIA $61.84 $1.01 WA .NiA 

NIA .561.84 51.01 WA NIA 

NIA S61.84 $1.01 'WA NIA 

NiA. 561.84 s1.01 NIA NIA 

WA . WA WA $0.49 w.00 

SI.% $61.45 $1.01 $101.41 $0.88 

$206 $193 I $1.36 $117.09 EIDI 

9.32 588.24 11.45 $124.93 si .os 

(I) Rate Band I conrinr of old Rate Baud I only. 

(2) R8tC Band 2 caMisk of old Rate Bands 2 awl 3, and thc Breeze Hill, Fairways. and Peace River Systems. 

i3) Rate Band 3 conslsa bf old Rate Baad 4 (GS Only). ----

OrtnER NO. PSC-12-0S9-FOF-WS 

B. Reasllatorv Asset for the Interim Deferral 

putslant to Order No. PSC-I0-0707-FOF-WS, AUF was allowed to defer recovery of a 

poltion of the inten‘m rate increase to which AUF was entitled for certain systems. These 

deferred interim watcr and wastewater tevenues resulted in “regulatory assets’’ to be reawered 

by AUF over tf *yeat period once fid ram were determined. At tk. expiration of the two- 

year Mod, mtes were t~ “be reduced ammhe-koard to remove the respective grossed-up 

amaFtizsltlan of the tegdator). assets.’ 

1. New Water Rate Band 2 

a AUF’s Argument 

AUF notes that old Water Rate Bands 2, 3, and 4, dong with the Breeze Hill and Peace 

River water systems were ail plaeed in the new Water Rate Band 2. Therefore, pursuant to the 

capbend methodology, these syfiems were supposed to have unifarm rates both now and in the 

future. However, AUF rrotes hahat Schedules 5-A, on pages 21 1 and 219, show that there would 

be n~ 2-year rate reduction foe old Water Rate Bands 2 and 3. Fuaher, Schedules 5-A on pages 

227, 235, and 251 of the Final Order have three different amounts for the two-year rate 

reductions for old Water Rate Band 4, Breeze Hill, and Peace River. AUF argues that this is not 

what is intended by the capband rate structure, and that all the systems in new Water Rate Band 

2 si~ould have the same aggregate two-year me reduction. 

b. Commission Analysis and Conclusioq 

We agree with AUF. In the initial calculations, our staff had individual percentage 

reductions for those bands and stand-alone systems that were due recovery of a regulatory asset. 

The effect of applying individual reductions would be inconsistent with our decision to 

consolidate certain bands and stand-alone systems. Dividing the aggregate regulatory assets of 

$228,294 for the new Water Rate &and 2 by its aggregate revenue requirement yields a 

composite across-the-board percentage reduction of 3.20 percent, that shall be applied to our 

approved new Water Rate Band 2 Rates to reflect the uniform 2-year rate reduction. The correct 

2-year rate reductions for new Water Rate Band 2 are reflected on Schedules 5-A (attached to 

’ this Order), respectively, for the old Water Rate Bands 2, 3, 4, as well as the stand-alone Breeze 

Hill and Peace River water systems. 

Although not included’in its Motion for Reconsideration. we find on our own motion that 

a similar correction shall be made for the 4-year rate reduction associated with the amortization 

of rate case expense approved for this docket Accordingty, the correct 4-year rate reductions for 

new Water Rate Bands 1 (old Water Rate Band 1 and Fairways) and 2 (old Water Rate Bands 2 

and 3, as well as the Breeze Hill and Peace River systems) are reflected on Schedules 5-A, 

attached.


DOCKET NO. 10033Q-WS 

PAGE IO 

2. NN! WRStnnratcr &Band2 

a. AUF’s Arrnrme ls 

AUF notes that old Wastewirter Rate Bands 2, 3, and 4, along with the Breeze Hill, 

Faimp, and PeaceRiver wasmvater systems were all placed in the new Wastewater Rate Band 

1. Ther%fbre, pursaant to tbe Gapband methodology, these systems were supposed to have 

uni4dnn rates both now and in the &We, However, AUF notes that Schedules 5-B on pages 

212,220.236.244,and 252 of.~c Final Order show that there would be no 2-year rate reduction 

for the aid WMewater Rate Band 2, Breeze Hill. Fairways. find Pace River systems. However, 

Schedule 5-3 on page 220 afthe Fid Order shows a *year rate reduction for old Wastewater 

Rate Band 3. AUE argues that this is not nb! is intended by the capband rate structure, and that 

all the systems in nav Wastewater Rate Band 2 shauld have the Same aggregate two-year rate 

reductiQil. 

b. Commission Anatvsis and Condusion 

We agree with AUF. In the initial calculations, our staff had individual percentage 

reductions for those bands and stand-alone systems that were due recovery of a regulatory asset. 

The effect Of applying individual reductions would be inconsistent with our decision to 

consolidate Oertain bands and @and-alone sysms. Dividing the aggregate regulatory assets of 

$124,2119 for the new Wastewater Rate Band 2 by its aggregate revenue requirement yields a 

composite acms-the-board percentage of 2.66 percent that shall be applied to our approved new 

Wastewater Rate Battd 2 Rates to reflect the uniform 2-year rate reduction. The wrrecl 2-year 

rate reductions for the new Wastewater Band 2 are reflected on Schedules 5-B (attached to this 

order), respectively, for the old Water Rate Bands 2 and 3, as well as the stand-alone Breeze 

Hill, Fairways, and Peace River wastewater systems. 

Although not included in AUF’s Motion for Reconsideration, we find on our own motion 

that a similar correction shall be made for the 4-year rate reduction associated with the 

amortization of rate case expense appmved for th% docket. Accclrdingly, the correct 4-year rate 

reductions for the new Wastewater Rate Band 2 are reflected on attached Schedules 5-B, 

respectively, for the old Water Rate Bands 2 and 3, as well as the Breeze Hill, Fairways, and 

Peace River wastewater systems 

I. AUF’s Arnument 

AUF notes that in calculating whether a refund of interim rates is required, this 

Commission calculates the interim revenue requirement excluding the rate case expense that may 

be incurred for the current rate proceeding. However, AUF notes that the Final Order reflects a 

reduction of $727,528 for the interim revenue requirement on Table 27 in the “RAF Grossed 

RCE” column, when the amount of annual rate case expense allowed in this docket was only 

$352,261 ($1,409,043 divided by 4). Grossing up for regulatory assessment fees (RAFs), AUF

ORDER Mo. PSC-12-0Z59-FOFWS 

DOCMETNO. IW33a-WS 

?AGE 1 I 

wl~lates that the total RAF Grossed RCE amount on Table 27 should be $368.860, and not the 

827,528 shown. Therefbre, AUF argues that this inadvertent mor overstates the refund 

mlcutation by approximately $358,668. 

AUF !kither mi& that the @nennt.of prior rate case expense amortization approved by US 

in bcket No; OBalZ1-WS we $342,533. and. when prod up for RAFS wauld approximate the 

S3.58,668 emimms figure fe.xoludes me ca6e expense attributable to Chuluota). AUF argues 

ttiat the mte,case oxpente from the prbr rate case were "autd expenses" incurred during the 

ilaerim col?~~ficm period, and th~lr thi3 amount should not have been removed from the 

calcularion nf the apprapriae interim rates. AUF conchdes that this emr must be corrected or 

the Final Order would be eOnfiss&q and prevemt AUF from recovering rate case expense 

approved by us in the last rate case. 

2. Commission Analvsis and Conclusion 

We agree with AUF. In our initial calculations in the Final Order, we excluded the 

aQproved rate case expense in Docket No. 080121-WS. The rate case expense from the last case 

is an gctual expense incurred during the in&rim collection period and should not have ken 

exoluded. Bsred qn the revised Calculations, the total grossed-up rate case expense that shall be 

excluded is %363,€9695. Based on the above, the fdlowing table reflects the appropriate incerim 

rsfimds; 

Table 4 

. ..



PACE 13 

F. Post-Reuression Revenue Reaukerncat 

1% &UPS Arrrurnem 

On page 149 of the Final Order, AUF notes that rhe post-repression revenue requirement, 

excluding miscellaneous service charges. was listed as $10,063,856 for water and S5.764.808 for 

qascewam. Homer, AUF states that the workpap%s suggest that the number $10.063.856 was 

a total water revenue requirement. from which $271,177 was subtracted to arrive at a post- 

repression water revenue requirement of $9,835,161. excluding miscellaneous charges. 

Simikly, AUF states that tbe wurkpapers suggesr the wasteviafer figure of $5,764,888 was a 

total wastewater requirtment fram wlrieh @9,040 was subtracted in order to arrive at a post- 

repression wastewater revenue requirement of 55,675,768, excluding miscellaneous charges. 

AUF requests thxt these figures k recandled. 

2. Commission Analysis &.Conclusion 

We agree with AUF’s atgument that there is an inconsistency between the figures in the 

workpapers and the language found in the Order. Therefore, to ensure clarity, we find the 

following changes to page 149 of fhe Final Order shall be made, and the Order shall read in part 

as shown: 

me appropriae Erepression revenue requirement, 

including miscellaneous service charges, is $&O+S&% $ 10.106.338 for the 

water system- > , . The aporopriate 

adiustments to the water system for metered ratesettina pumo ses are: I) the 

removal of miscellaneous service charges of $271.177; and 2) a water system 

reduction of $42,482 to reflect expense reductions associated with the 

Commission-approved repression adjustments. . . . These & rates are 

designed to recover revenues from metered rates rqtkmed of 

SW€3&54 $9.792.679 for the water system. 

The appropriate ore-repression revenue req uirement. including 

miscellaneous service charges is $5.764.808 for the wastewater system. The 

mommiate adiustment to the wastewater system for metered ratesettine D U~OS~S 

is the removal oC&50,507 associated with miscellaneous service charges and 

revenues associated with residential wastewater-onlv flat rate charges-eMXW.0 I . 

. . . These rffultina rates are designed to recover w e s from metered mesa 

-714.301 for the wastewater system. 

The above clarifying language does not affect the ultimate revenue requirement and the 

calculation of rates.

ORDER NO. p5C-12-024pFOF-WS 

DOCKETNO. 10033O~WS 

PAGE 14 

0. Miscellaneous TvowaDhical Emn 

I. AUF’s Aram t 

In additim to the fom&dng, AUF brings to our atlention the following miscellaneous 

typogmpIiica1 errors appearing in fhe Final Ordm 

a. Pave 93. The last semence at the top of page 93 of the Final Order states: “As a 

result, water revenues shall be reduced by $1 10,012 and wastewater revenue shall 

be reduced by $58,306.” AUF avers that the sentence should read: “As a result, 

water revenues shall be reduced by $26,527 qnd wastewater revenue shall be 

reduced by $141,791.” AUF further notes that the total overall reduction is 

mmW, and thus this error has no impact on the ultimate revenue requirements or 

ratas. 

b. 

c. 

d. 

Table 26. On page 166 of the Fiwl Order (Table 26). for New Wastewater Rate 

Band 2 the RK) and rate reduction for the 8” meter size appears to have been 

inadvemtly mpid and imerted for the IO” meter size. AUF states that for the 

IO” meter size, the BFC should be $3,953.70, and the rate reduction should be 

$69.76. 

Schedule 5-A. On page 203 of the Final Order, with respect to Schedule 5-A for 

the columns perzaining to “Commission Approved Final” and “4-year Rate 

Reduction” in old Wa&r Rate Band 1, the BFC amounts in the Irrigation Section 

differ Ram those in the Residential, General Service and Multi-Family Section. 

AUF avers that these amounts should be the same, and that the correct BFC 

amounts for Residential, General Service, Multi-Family, and Irrigation should be 

as set forth on Table 25 on page I65 of the Final Order. 

Schedule 5-B for Wastewater Rate Band 1. On page 204, with respect to Schedule 

5-B for the column “Commission Approved Final” for WW Rate Band I, the BFC 

amounts for the General Service class and the Flat Rate for Valencia Terrace are 

actually the “4-year Rate Reduction” amounts. The correct “Commission 

Approved Final” General Service BFC and Flat Rate amounts are therefore 

missing from the Final Order. Also, for those m e lines, the amounts in the 

column %year Rate Reduction” are incorrect. The Correct numbers for this table 

appear to be in the Commission workpaper file named “Wastewater Band 1 .XLS 

which was provided to all parties. 

2. Commission Analvsis and Conclusion 

We agree that the corrections noted above appear to be scrivener erron and they shall be 

made. In addition, on page 220, Schedule No. 5-B. the approved final gallonage charge for 

residential customers showed a charge of $8.869, and on page 228, Schedule No. 5-6, the



PAGE 16 

increawd rafes for ail m ini& nsidential cpsfchlas. and c) a resulting increase in the rate cap 

threslwld for residentla1 customers. We fitad ihat the changes to the residential rates in 

Waskwatw Rate Band 2, as well as the change in the rate cap threshold for that band, shall be as 

shown below: 

Table 5 

Summary of Approwd C-ges tu Monthly Rales: 

Flat Raw: 

Residential Wastewater Rate Band 2 

Pet Fmal Commhien 

&!Cz AoDrOved 

increase 

(Decrease) 

Smy GUS S1.84 

$1.83 

Zephyr Shores 850.00 $6 1.84 

611.84 

Jungle Den %.O? $61.84 

($24.23) 

Lake Gibson Estates 

Base Facility Charge 

(518’’ x 3/4“) 

ZlBB.52 

$34.38 

$6 1.84 

$34.66 

(%I 18.68) 

$0.28 

RS Kgal Charge $8.86 $8.93 

$0.07 

Rate Cap Threshold 

(32 6 Kgal) 

887.53 $88.24 

$0.71 

Because the rates set in the Final Order for Wastewater Rate Band 2 were in error, all 

unmered flat rate customers, except for the o ~e flat-rate customer in Sunny Hills and the one 

flat-rate customer in Zephyr Shares, &all be refunded the difference between the erroneous rates 

and the appropriatc rates as set forth in Table 5 above. For all other wastewater customers in 

Wastewater Rate Band 2, AUF shall be allowed to charge a surcharge to collect [he difference 

between the erroneous rates and the appropriafe rates as set forth in Table 5. 

We believe the requirement for rebnds and surcharges is wnsistent with the holding in 

GTE Florida. Inc. v. Clark. 668 So. 2d 971, 972 (Fla. 1996)(GTE Florida. Inc. v. Clark). In that 

case, the Florida Supreme Court, set out a ‘Yairness and equity” exception to the prohibition 

against retroactive ratemaking, and specifically stated: “[we view utility ratemaking as a matter 

Of fmrnes. Equity requires that both ratepayen and utilities be treated in a similar manner.” 

In GTE Florida, Inc. v, Clark. the Court was addressing a Commission order 

implementing a remand imposed by GTE Florida Inc. v. Deason, 642 So. 2d 545 (Fla. 1994), 

which resulted from our disallowance of certain costs which had been included by GTE Florida, 

Inc. in a prospective test year in rate case proceedings. In GTE Fbrida, Inc. v. Deason, the 

Florida Supreme Court ruled that we erred in disallowing the costs. GTE sought to impose a 

surcharge to recover the erroneously disallowed wsts from the effective date of the original 

Commission order. We denied the surcharge, characterizing it as retroactive ratemaking. but 

were reversed by the Florida SupTeme Court in GTE Florida, Inc. v. Clark, in which the Court 

hcld


DOCRET NO. l&03D-WS 

PAGE 17 

g. ai 973. 

We . . . reject the contention thar GTE‘s requested surcharge constitutes 

retmfwlive ratemaking. This is not a case where a new rate is requested and then 

ripplied retroactively. The surcharge we sanction is implemented to allow GTE to 

RCOVW cbsls already expeaded that sbuld have beem lawfully recoverable in the 

PSCS mst ark. 

In the ease at hand, we have detwmincd &at the appropriate wastewater revenue 

requirememt was. However, in Wastewater Fbte Band 2; the revenue requirement was 

mneously allocated. This erronecqls allocation resulted in some customers paying too little, 

and other wstomers paying too much. If we were to only require a refund to those customers 

who paid too much, AUF would not be allowed to collect the revenue requirement to which we 

determined it was entitled. Therefore, to comct the “errar,” AUF shall be required to refund the 

”overcharpcs,” and be allowd to calltct a surcharge from those. customers whose rates were set 

too low based on the erroneous allocation of the revenue requirement. AUF was entitled to the 

revenue requinment set forth in the Final Order when it was issued and the final rates approved. 

‘l%wefoore,ts set out above, refunds shall k reqqired, and surcharges shall be authorized. 

Based on the foregoing. it is 

ORDERED by the Florida Public Service Commission that Aqua Utilities Florida, Inc.’s 

Motion for Reconsideration shall be granted in its entirety as set forth in the body of this Order. 

It is further 

ORDERED that all attachments and schedules attached to this Order are by reference 

incorporated herein It is further 

ORDERED mat on our own motion, we shall reconsider and correct the additional noted 

scrivener’s e ms and approve the recalculation of the four-year rate reduction for amortization 

of rate case expense as indicated in the body of this Order. It is further 

ORDERED that on our own motion, we shall reconsider and correct the arithmetic 

allocation error made in calculating the appropriate rates for the customers in Wastewater Rate 

Band 2 as set forth in the body of this Order. It is further 

ORDERED that the rates for Wastewater Rate Band 2 shall be adjusted as shown in the 

body of this Order. It is further 

ORDERED that Aqua Utilities Florida, Inc., shall make refunds and be authorized to 

collect surcharges for its Wastewater Rate Band 2 customers as set forth in the body of this 

Order. It is further 

ORDERED that except for corrections noted above, all other aspects of the Final Order 

shall be reaffirmed. It is further

. 

&mnksmn Ckk 

.Fl&da.PIlbffEQerYioe C d a 

2543~dW~Ulevard 

~' T a l w F W 32399 

(850) 4.13-67?0 

www.W~.Com 

Cnph furnished: ' A copy of this document is 

p~vided to the .parties of record at the time of 

buncc and, if apPlicable, 

. . interested persons. 

NOTICE OF JUDICIAL REVIEW 

The Flarida Public Service Commission is iequired by Section 120.569(1), Florida 

Statures, io Mfy parries of my administrativchcaring orjdicid review of Coiimission orders 

tbst & avaihbie d er Ssorions 12057 oc .128.&S, Florida Stawes. as well a$ tk procedures and 

time if mi^^ .that apply. &e .&auld a0t be eanstrued to .mean' dl requests for an 

atlminiW.ve.ter jhajcipd &view will bc gramed orresult in the relief sought. 

Any paty advtraelg afF&sd @ &e Cammission's. final action m this matter.may request 

judEaa1 nWkw by FlW S~prerneCourt in die 

kfan ckctric, gas or telephone utility or 

ths First Disbict Court of Appeal in the case of a water or war~nuater utili by filing a notice.of 

~ p ~ with t l thc Offa of.Commission Clerk, 2540 Shwnard Oak Boulevard, Tallahnsiee, 

Ptdda 32399-0850. and filing a copy of the rotice of appeal and the filing fee with the 

ampdate court. This filing must be completed within thirty (30) days after the issuance of this . 

mdn; purswenl to Rub 9.1 10, F1dda.Rults of Appellate.Pnyedun. The notice of appl must 

k tn the form specified in Rule 9.9OO(a), Floriph Rules of Appellate' Procedure. 

,



PAGE 19 

New Water2 CUdWxtr2 36,565 0.955 38.288 1,474.868 1474.86a IP7WE 

O~Wam3 7.233 0.955 21.385 916pIJ 916841 PtkW 

101.591 0.955 106.379 462,187 

0.955 

0 955 

IKt4W 168,012 2851.698 589% @& 

New WW I Old WW 1 14.619 0.955 15.308 

New WW 2 Old WW 2 

75.278 18.825 4.467.120 1.76%. 4.407.120 1.76% 

NewWW3 OldWW4 4.086 0955 4379 495.850 0.86% 491850 0.86% 495.850 0.86% 

Attachment A

ORDER NO. PSC- 12-0259-FOF-WS 

DOCKETNO. 10033O-WS 

PAGE 20 

Aqua Utilities plerida. Ine - Wstv bnd 1 kheduk EA 

wltcer MMtW S m Rates 

Docket NO. IOa336WS 

Tesl Yuu Ea&$ w1 0 

Ratrr Comdssiin Utiiitv cOm&in %Year &Year 

Prhrto Approved Reqnestea Approved Rate Rate 

Fill0 Pi I Fid Reduction Reduction 

ResiBential. Gheral Service and Multi-Family 

Base Faellity Charge by Meter Size: 

SIB" x 314" 

$14.13 $15.64 $17.66 $I 8.57 NIA $0.72 

314" 

$21.19 $23.45 526.48 $27.86 NIA $1.09 

I" 

sns 1 $39.08 $44.14 $46.43 NIA 51.81 

1-1/2" 

$70.63 $78.16 $88.28 $92.85 NIA $3.62 

2" 

5113.01 $125.06 $14 I .24 $14856 NIA 55.79 

3" 

5226.03 5250.14 $282.49 $297.12 WA 511.58 

4" 

$353.17 $390.84 $44 I .39 546425 NIA SlB.09 

6" 

$70633 $78 I .67 $882.18 $928.50 NIA $36. I7 

8" 

s t. 130. I3 

$I ,233.68 $1,412.44 $1.465.60 NIA $57.88 

10" 

16 1,62457 si,w.a6 $2.030.39 $2,135.55 NIA $83.20 

callonage Charge RS Tier One 

Gallomage Charge US TKr TWO 


Gallmas Charge GS 

lrrimtiaa 


518" x 314" 

314" 

I" 

1-In" 

;r' 

3" 

4" 

Gallomge Charge Tier one 


Gallonage Charge Tier b e 


Base Facility Charge by Meter Sire: 

2" 

3" 

4" 

6" 

8" 

IO 

3.000 Gallons 

5,000 Oallom 

1O.ooO Gallons 

$2.00 

$251 

$6.0 t 

$3.34 

m.00 

$0.00 

s0.w 

m.00 

$0.00 

$0.00 

w.00 

$0.00 

w.00 

$0.00 

59.42 

5 1 8.84 

S29.44 

S58.86 

194.18 

$135.38 

$2.2 I 

$2.78 

$6.65 

$3.70 

$0.00 

$0.00 

6O.W 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

SO.00 

so.00 

$10.42 

$20.85 

$32.58 

$65.14 

$104.23 

S 149.82 

$6.49 

$9.73 

$12.98 

$6.98 

S 17.66 

$26.48 

544.14 

$88.28 

$14124 

$282.49 

544 I .39 

$6.49 

$9.73 

$12.98 

$11.77 

n3.54 

$36.78 

$73.57 

$117.70 

$169.10 

$3.33 

55.84 

$8.76 

$4.64 

$18.57 

$27.86 

$46.43 

S92.85 

$148.56 

$297.12 

$464.25 

53.33 

55.84 

G.76 

$12.38 

$24.76 

$38.69 

$77.38 

$123.80 

$177.96 

Tvnical Residential Bills 5/8" x 314" Meter 

$20.13 S22.27 S37.13 S28.56 

$24.13 126.69 $50.11 . $35.22 

536.68 $40.59 $95.52 561.91 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

KIA 

NIA 

NIA 

50.13 

$0.23 

$0.34 

$0.18 

$0.72 

$1.09 

51.81 

$3.62 

$5.79 

hll.58 

$18.09 

$0.13 

$0.23 

$0.34 

$0.48 

$0.96 

$1.51 

$3.01 

$4.82 

56.93 

$1.11 

$1.17 

$2.4 I

$14- 

I" 

I-lQ" 

2" 

3" 

4" 

6" 

8" 

10" 

Oallonage Cbarge RS Tier One 

Gatlonage Charge RS Tier Two 

Gptlmage Cbarge RS Tier Three 


irrieation 


518" x 314" 

314" 

I" 

1-10" 

2" 

3" 

4" 

Gallonage Charge Tier om 

Galtonage Charge Tier two 


Private fin Protection 


2" 

3" 

4" 

6" 

8" 

10 

3,000 Gallons 

5,000 Gallons 

10.000 Gallons 

516.29 

$24.44 

w.73 

$81.46 

S 130.34 

EZd0.69 

$4337.3 I 

M 14.63 

$ 1,303.4 I 

$1,873.65 

S3.82 

$4.77 

$1 1.46 

35.33 

$0.00 

$0.00 

moo 

$0.00 

s0.w 

50.00 

$0.00 

$0.00 

so.00 

$0.00 

$ 10.86 

$21.72 

$33.94 

S67.89 

5108.61 

S 156. I4 

51,s.91 

s26.37 

S41.29 

594.57 

SI5132 

S302.66 

S472.88 

5945.77 

$1.513.24 

$2.175.27 

s4.43 

$5.54 

$13.30 

SG.19 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

SO.00 

$0.00 

$0.00 

$12.61 

$25.22 

$39.4 I 

$78.81 

$126.09 

$I 84.27 

517.66 

S26.48 

$44.14 

ys8.2B 

6141.24 

$282.49 

$441.39 

sm 78 

SI ,4 12.44 

12.030.39 

$6.49 

$9.73 

S12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$88.28 

5 14 I .24 

$282.49 

$44 1.39 

$6.49 

$9.73 

$12.98 

511.77 

$23.54 

m.7a 

$73.57 

SI 17.70 

$169.20 

$19.17 

528.76 

$4793 

$95.85 

S153.36 

5386.72 

$47925 

$958.50 

$ I S33.60 

$2.204.55 

M.55 

$9.83 

$13.10 

57.35 

$19.17 

$28.76 

$47.93 

$95.85 

$153.36 

S306 72 

$479.25 

$6.55 

$9.83 

113.10 

512.78 

$25.56 

$39.94 

s79.a 

S127.80 

$183.71 

Tynical Residential Bills 5/8" x 31.4" Meter 

527.75 $32.20 $37.13 $38.82 

S33.39 $41.06 $50.1 I $5 I .92 

$59.24 $68.76 s95.s2 $97.79 

SO.6 I 

50.92 

51.53 

53.07 

S4.91 

$9.82 

Sl5.24 

$30.63 

$49.09 

$70.56 

so 21 

$0.3 1 

W.42 

SQ.24 

$0.6.1 

$0.92 

$1.53 

$3.07 

$4.9 I 

$9.82 

$15.34 

$0.2 I 

$0.3 I 

$0.42 

w.4 I 

KJ.82 

$1.28 

$2.56 

$4.09 

S5.88 

F I .24 

$1.66 

s3.1 I 

$0.50 

$0.75 

$1.26 

$2.51 

$4.02 

58.04 

$12.56 

625.11 

$40. I8 

$57.76 

$0.17 

$0.26 

$0.34 

$0.19 

$0.50 

50.75 

SI .26 

52.51 

$4.02 

58.04 

$12.56 

50.17 

$0.26 

$0.34 

60.33 

10.67 

E1.05 

$2.09 

$3.35 

54.81 

s I .02 

SI 36 

$2.56



PAGE 22 

Aqim UtUitia Wia, lac -Water Baed 3 

WsralwaatMy~*aPtor 

T&t Ym Endrd 4fWtb 

Raw Commission Utility Commission 2-Year 4-Year 

PdW to Appprovcd Rquated Approved Rate Rate 

pcripmrail. General Ssrvke and Mnltl-Family 

Babc Facility Charge ky Metcr Size 

518" 3/4* 

314" 

I" 

I-In" 

2" 

3" 

4" 

6" 

8" 

IO" 



Gallonage Charge Tier 6re.e 

Gallonage Charge CS 

Irrleetkin 


5/8' .. x 314" 

314" 

I' 

1-112" 

2" 

3" 

4" 


Gallonage Charge Tia WQ 

Gallonage Charge Tim three 

Private Nre Protection 


2" 

)" 

4" 

6" 

8" 

IO" 

3.000 Gallons 

5.000 Gallons 

IO.000 Gallons 

Schednk 5-A 

aaekc( NO. 100)30-ws 

r i lnierim Final Final Reduction Rcduclion 

$16.68 

s255.02 

s41.lI 

w1.42 

E133.47 

w66.92 

$417.07 

$834.14 

$1.334.62 

S 1,918.52 

S5.01 

$6.26 

$15.03 

$6.14 

$0.00 

so.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

SII.I2 

$22.24 

$34.76 

$69.51 

$11122 

S 159.88 

$16.68 

$25.02 

Y(l.71 

83.42 

$i 33.47 

$266.92 

$417.07 

$834.14 

$1,334.62 

$ I .9 18.52 

$5 01 

$6.26 

$15.03 

$6.14 

so.00 

$0.00 

so.00 

so.00 

SO.00 

$0.00 

$0.00 

$0.00 

$0.00 

SO.00 

511.I2 

52224 

$34.76 

S69.5 I 

$I 11.22 

$159.88 

$17.66 

S26.48 

$44.14 

SW.28 

914124 

$282.49 

$44 I .38 

$882.78 

$1,412.44 

$2.030.39 

56.49 

s9.73 

$12.98 

$6.98 

$17.66 

$26.48 

$44.14 

$88.28 

$141.24 

$282.49 

$44 I .39 

$6.49 

$9.73 

$12.98 

SI i.n 

$23.54 

$36.78 

$73.57 

SI 17.70 

$169 20 

$19.17 

528.76 

s47.93 

$95.85 

SI 53.36. 

5306.72 

Y(79.25 

$958.50 

f I.533.60 

$2.204.55 

S6.55 

$9.83 

s13.10 

$7.35 

$19.17 

f28.76 

647.93 

$95.85 

5153.36 

$306.72 

S479.25 

56.55 

$9.83 

$13.10 

$12.78 

$25.56 

$39.94 

$79.88 

$127.80 

SI 83.71 

Tvoical Residential Bills Sk" I 314" Meter 

$31.71 $31.71 $37.13 $38.82 

$4 I .73 S4 1.73 $50. I1 951.92 

$73.03 $73.03 S95.52 $97.79 

$0.6 I 

$0.92 

f1.53 

53.07 

$4 91 

99.82 

$15.34 

$30.68 

$49.09 

570.56 

$021 

SO31 

$0 42 

$0 24 

10.6 I 

$0.92 

S1.53 

53.07 

$4.91 

$9.82 

$15.34 

50.21 

50.3 I 

S0.41 

$0.4 I 

$0.82 

$1.28 

S2.56 

$4.09 

55.88 

E 1.14 

51.66 

s3 II 

$0.50 

$0.75 

$1.26 

$2.5 I 

$4.02 

$8.04 

$12.56 

n5.11 

$40.18 

$57 16 

I- 

$0 17 

$0.26 

$0.34 

50.19 

$0.50 

$0.75 

$1.26 

32.51 

$4.02 

$8.04 

S12.36 

$0.17 

$0.26 

$0.14 

$0.33 

$0.67 

$1.05 

$2.09 

$3.35 

$4.81 

$1.02 

$1.36 

I 

- ._ .

314' 

I" 

I-In" 

2- 

3" 

4" 

6" 

8" 

Io" 

lrrieprisa 

B+u Fwility Charge by Mcfa 3%: 

SW x 3lV 

314" 

I" 

I-IR" 

2' 

3' 

4" 

Gallonage Charge Tiaonc 

Gallowge Charge Tier two 

Gallonage naige TEr ha 

3" 

4" 

6' B' IO" 

3,000 Gallons 

5,Ooo Gallons 


Si5.71 

s23.s 

539.29 

$B.H 

s125.73 

S251 A6 

5992.9 I 

tTBS.I@! 

Sl257.ST 

Sls07.4a 

$7.31 

m.98 

320.57 

s11.42 

$0.00 

m.00 

$0.00 

$0.00 

f0.00 

m.00 

$0.00 

50.00 

moo 

m.OO 

510.48 

Rb.96 

S32.74 

S6S.48 

S104.77 

$IS061 

f15.71 

$23.58 

53929 

$78.58 

5125.73 

sz51.46 

r392.9 I 

sm.82 

s 1,25732 

bl m.40 

S7.31 

98.98 

$2067 

$8.42 

517.66 

$26.48 

S44.14 

E08.28 

SI 4 I .24 

$282.49 

E44 I .39 

SH2.78 

SIA12.44 

$2.030.39 

36.49 

e.n 

$12.98 

$6.98 

sn.00 5l7.W 

50.00 126.48 

MOM, $44.14 

ma0 $88.28 

w.00 $141.24 

m.00 5282.49 

sO.OO s441.39 

$0.00 $6.49 

$0.00 $9.73 

$0.00 . $12.98 

$10.48 

$28.96 

02.74 

S65.48 

5104.77 

$150.61 

si 1.n 

523.54 

S36.78 

s73.57 

SI 17.70 

$169.20 

$19.17 

S28.76 

$47.93 

S95.85 

S153.36 

5306.72 

$47925 

S9S8.50 

$1,533.60 

$2.204.55 

$6.55 

$9.83 

$13.10 

$7.35 

519.17 

S28.76 

547.93 

S95.85 

S153.36 

$306.72 

$47925 

S6.55 

$9.83 

513.10 

S12.78 

$25.56 

s39.94 

579.88 

$127.80 

3183.71 

Tv~inl Rerldentlil BUh 5W x 3/4" Meur 

s37.64 637 64 $37 13 

$52.26 s52.26 150. I I 

1630 82 

$5 I .92 

$97.16 591.16 595.52 E97.79 

... 

$0.6 I 

50.92 

SI 53 

$3.07 

54.91 

$9.82 

$15.34 

$30.68 

549.09 

570.56 

60.21 

$0.3 I 

$0.42 

$0.24 

$0.61 

$0.92 

51.53 

$3.07 

54.91 

S9.82 

515.34 

$0.21 

$0.3 I 

$0.42 

$0.4 I 

60.82 

$1.28 

$2.56 

S4.09 

$5.88 

S1.24 

$1.66 

E3 II 

50.50 

$0175 

$1.26 

$2.5 I 

54.02 

$8.04 

$12.56 

$25.1 I 

$40. I8 

$57.76 

10.17 

$0.26 

$0.34 

$0: I9 

50.50 

$0.75 

51.26 

52.51 

24.02 

$8.04 

S12.56 

$0.17 

50.26 

$0.34 

50.33 

5a.67 

s 1 .os 

S2.09' 

$3.35 

54.81 

$1.02 

$1.36 

51.56


WXKETNO. 1003M-WS 

PAQE 24 

Aqm Wir*l Plortar, he. - BrrczeWT11 

%€erMmi4iy swia Rata 

r3st Yep Elukd 4fm10 

Rntn CommWon Utility Commivion 

Scbedak 5-A 

Dockel No. 1003wI-WS 

2-Year 4-Year 

Priatto Approved Rqncsted Approved Rale Rate 

Filing 

RCPIBMlipLGd Smict and Multi-Famfly 

interim Fiial Final Reduction Reduction 

3/40 

I" 

I-IR" 

2.' 

3" 

4" 

6" 

8" 

Io" 

Gallonage Charge Rs Tier One 

Gallonage Clwge RS Tier Two 

Gallowge C h e RS Tkr Thee 

GalrOnage Charge GS 

IcllEnliDn 


518" x 314" 

114" 

I" 

l-lm 

2" 

1" 

4" 


Gallonage Charge Ti two 

Gallonage Chnrge Ti three 

Private Flre Protection 


2" 

3" 

4 " 

6" 

8" 

IO* 

1,000 Gallons 

5.W Gallons 

10.000 Gailons 

$15.51 

f23.n 

538.77 

sn.51 

$124.06 

1248.1 1 

$387.68 

$775.17 

m.00 

€0.00 

$2.70 

S2.70 

$2.70 

$2.70 

t15.5I 

$15.51 

$lS.Sl 

515.51 

515.51 

$15.51 

$15.51 

$2.70 

$2.70 

52.70 

$0.00 

$0.00 

$0.00 

$0.00 

50.00 

s0.00 

$26.79 

m.20 

566.97 

$133.92 

$214.29 

$428.57 

$665.65 

$1.139.32 

w.00 

$0.00 

$4.66 

$4.66 

M.66 

$4.66 

$26.79 

$26.79 

526.79 

$26.79 

S26.79 

$26.79 

526.79 

$4.66 

$4.66 

$4.66 

$0.00 

$0.00 

10.00 

$0.00 

$0.00 

$0.00 

$17.66 

$26.48 

544.14 

$8828 

$14124 

~282.49 

x441.19 

$882.78 

S1.4 12.44 

$2.030.39 

s.49 

$9.73 

512.98 

56.98 

$17.65 

S26.48 

s44.14 

588.28 

s 14 I .24 

5282.49 

$44 1.39 

56.49 

m.73 

$12.98 

$I 1.77 

$21.54 

$36.78 

$73.57 

s117.m 

S 169.20 

$19.17 

$28.76 

s47.93 

$95.85 

$153.36 

$306.72 

5479.25 

$958.50 

$1,533.60 

$2,204.55 

$6.55 

59.83 

$13.10 

s7.35 

S19.17 

528.76 

$47.93 

$95.85 

I 153.36 

5306.72 

$479.25 

$6.55 

$9.83 

113.10 

$12.78 

$25.56 

539.94 

579.88 

5127.80 

Si81.71 

TvoicPl Re$idenlW BiWl5M' I 314" Meter 

523.61 S48.77 $17.13 538.82 

$29.01 ES0.09 $50. I 1 $5 1.92 

542.51 $73.19 $95.52 $97.79 

$0.61 

$0.92 

S1.53 

53.07 

54.91 

$9.82 

$15.34 

$30.68 

$49.09 

570.56 

$0.2 I 

$0.3 I 

$0.42 

$0,24 

10.61 

$0.92 

s I SI 

$3.07 

$4.91 

$9.82 

$15.34 

$0.21 

50.31 

$0.42 

$0.41 

$0.82 

$1.28 

$2.56 

$4 .w 

15.88 

16 I .24 

$1.66 

$3.1 I 

$0.50 

$0.75 

5126 

$2 51 

$4.02 

68.04 

$1256 

$25. I 1 

$4O.I8 

$57.76 

$0.17 

$0.26 

$0.34 

$0.19 

$0.50 

$0.75 

51.26 

$2.51 

$4 02 

$8.04 

112.56 

$0. I7 

$0.26 

$0.34 

50.33 

$0.67 

$1.05 

$2.09 

$3.35 

$4.81 

s I .02 

51.36 

$2.56

ORDER NO. PSC-IZ-0259-FOF-WS 


PAGE 25 

Aqna UtilKics Florida, 1% - Fairways 

Wakr .4Qonthly Scwka Bates 

TWYerrEnded 41U)lIO 

Schedule 5-A 

Docket No. IMIJ%WS 

Rata Commisbn UtiEty Conrmisdun 2-Verr 4-Yeir 

Priorto Appmved Raqvafed Approved Rate Rate 

F i i 

P-& I. GLll0i-a 1 Smin a nd Muiti-F* 

5sso Facility Chmge by Mciu Sioc 

51.' x 3/4' 

$7.39 

314 " 

$759 

I" 

57.59 

I-lm 

$7.59 

lntain 

$10.68 

510.68 

$10.68 

$10.68 

Final 

517.66 

$26.48 

$44.14 

688.28 

Find 

518.57 

$27.86 

$46.43 

$92.85 

Redustion 

NIA 

NIA 

NIA 

NIA 

Redoclion 

50.72 

$1.09 

$1.81 

$3.62 

2" 

3" 

4" 

6" 

U" 

10- 

$7.59 

57.59 

57.59 

57.59 

57.59 

57.59 

$10.68 

$10.68 

S10.6S 

$10;6& 

510.68 

s 10.68 

$141.24 

5282.49 

544 1.39 

$882.78 

s I.412.44 

52,030.39 

S148S6 

$297.12 

$46425 

592850 

$1,485.64 

62.1 35.55 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

$5.79 

$1 1.58 

$18.09 

$36.17 

557.88 

$83.20 

Gallonage Charge RS Twr One 


GatlonageCharge US Tier Three 


Irrlmlion 

Bart Facility Charge by Meter Size: 

518" x 314' 

314" 

I" 

1-112" 

2" 

3" 

4y 




Gallonage Charge Tier four 


Base Facility Charge by Mner Size: 

2' 

3" 

4" 

6' 

8" 

IO" 

3,000 Gallons 

5,oOO Gallons 

lO.000 Gallons 

$1.77 

$1.77 

$ I .77 

51.77 

s7.59 

$7.59 

$7.59 

57.59 

.$7.59 

57.59 

$7.59 

$1.77 

$2.02 

$2.53 

$3.03 

$0.00 

$0.00 

50.00 

$0.00 

$0.00 

m60,00 

$2.49 

52.49 

62.49 

$2.49 

$10.68 

' 510.68 

$10.68 

510.68 

510.68 

510.68 

510.68 

$2.49 

$2.84 

$3.56 

54.28 

50.00 

$0.00 

$0.00 

$0.00 

50.00 

$0.00 

$6.49 

$9.73 

$12.98 

56.98 

$17.66 

S26.48 

S44.14 

588.28 

$14 1.24 

5282.49 

S441.39 

$6.49 

$9.73 

$11.98 

$0.00 

$11.77 

$23.54 

$36.78 

573.57 

6117.70 

SI6920 

$3.33 

$5.84 

$8.76 

$4.64 

5 18.57 

$27.86 

$46.43 

$92.85 

$148.56 

5297.12 

5464.25 

$3.33 

$5 E4 

$8 76 

NIA 

$12.38 

$24.76 

$38.69 

577.38 

$123.80 

$177.96 

Tvsicnl RcEidenlinl Bills SB" r 314" meter 

$12.90 $18.15 537.13 $28.56 

S 16.44 $23. I3 $50. I I $35.22 

$25.29 535.58 $95.52 $61 91 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

WA 

NIA 

NIA 

N/A 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

NIA 

WA 

SO. I3 

10.23 

$0.34 

$0.18 

$0.72 

$1.09 

$1.81 

$3.62 

$5.79 

511.58 

SIS.09 

$0. I3 

$0.3 

$0.34 

N!A 

10.48 

$0.96 

$1.51 

$3.01 

54.82 

E6.93 

$1.11 

$1.37 

$2.4 I 

.



PAGE 26 

Aqua IkStk$ Fbrida, Inc. - b cc Rlvtr 

Water lorolyblg Sewkt Rata 

Tat Ydc 4t3lWkl 

RWcntW. Csiera4 SpFvia and Multi-Family 

Basc Faciri Charge by Meter Size: 

314" 

I" 

I-IR" 

2" 

3" 

4" 

6" 

8' Io" 

Galhaam Chsnc oer 1,MH) Gallons 


Gallonage Chargn RS Tics Two 


Gallonage Charge. GS 

lrrieation 

Bare Facility Charge by Meter Size: 

518" x 3/11" 

314" 

I" 

I-lW 

2" 

1" 

4" 

Gallonage chbrge Tier me 

Gallonage Charge Tiff two 

Gallonage Chap,c Tiff three 



2' 

3" 

4' 

6- 

8" 

IO' 

3.00 Gallons 

5,000 Gallons 

I0,OGo Gallons 

Schedule 5-A 

Docket No. 1003M-WS 

l&M Commissioa Utility Commission 2-Year 4-Year 

Prior ta Asscooroved Reauested Aooroved .. 

Rate Rate 

Piing iiterim Anal Final Reduction Reduction 

$24.66 

54I.CU 

sg2.20 

513t.52 

$263.03 

3410.99 

$82 I .97 

f1.315.16 

$ 1,890.54 

$4.94 

$6.17 

$14.81 

$6.05 

$0.00 

so.OO 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

$0.00 

E6.00 

$10.96 

$2 1.92 

$34.25 

$68.50 

$109.60 

$157.55 

$20.02 

$30.04 

$50.06 

$105.12 

S 160.20 

$120.38 

S500.60 

$1 .00I. I9 

SI ,60 I .9 I 

$2,302.75 

$6 02 

$7.52 

$18.04 

$7.37 

so 00 

$0.00 

so 00 

$0.00 

so.00 

w.00 

$0.00 

$0.00 

w.00 

$0.00 

$13.35 

S26 70 

$41.72 

$83 44 

$13150 

$191.90 

S 17.66 

~26.48 

$44.14 

$88.28 

$141.24 

$282 49 

$44 1.39 

$882.78 

$1 .4 12.44 

$2.030.39 

$6.49 

$9.73 

$1298 

56.98 

$17.66 

$26.48 

$44.14 

$88.28 

$141.24 

$282.49 

s84 1.39 

$6.49 

59.73 

$12.98 

$11.77 

$23 54 

$36.78 

s73.57 

$117.70 

$169.20 

$19.17 

.PA76 

347.93 

$95.85 

St53.36 

$506.72 

$479.25 

W958.40 

$1.233.60 

52.204.55 

$6.55 

$9.83 

$13.10 

$7.35 

$19.17 

$28.76 

$47.93 

S95.85 

I 153.36 

$106.72 

$479.25 

$6.55 

$9.83 

$11.10 

$12.78 

s25.56 

$39.94 

$79.88 

$127.80 

s181:71 

Tytrical Residential Bills 5/8" I 3/4" Meter 

$3 I .26 

Wl.14 

S38.08 

$50. i z 

637.13 . 

S5O.I I 

S38.82 ~ 

$5 1.92 

$7 I .97 97.72 $95.52 $97.79 

$0.6 I 

$0.92 

$1.53 

$3.07 

$4.91 

$9.82 

$15.34 

$30.68 

$49.09 

$70.56 

$0.21 

$0.3 I 

$0.42 

$0.24 

S0.61 

$0.92 

$1.51 

$3.07 

$4.9 I 

59.82 

s15.14 

$0.21 

$0.3 I 

$0.42 

$0.4 I 

$0.82 

SI .28 

$2.56 

54.09 

SS.88 

$1.24 

$1.66 

s3.1 I 

$0.50 

$0.75 

$1.26 

$2.5 I 

$402 

$8.04 

$12.56 

$15. I I 

$40.18 

$57.76 

so. I7 

$0.26 

E0.34 

50.19 

50.50 

$0.75 

$1.26 

$2.51 

$4.02 

$8.04 

$12.56 

SO. I7 

$0.26 

$0.34 

E0.53 

40.67 

$I .05 

$2.09 

$1.35 

$4.81 

$1.02 

$1.16 

$2.56

I I 

S7.13 

$25.70 

MA284 

sa5.66 

$137.07 

S274.PZ 

'p428.3 I 

SW63 

$1,37041 

51,970.24 

S21.M 

u225 

$53.76 

$107.49 

JI72.OI 

$343.99 

$537.48 

S1.074 .98 

51,71997 

$2,472.44 

sxai 

$56.81 

$94.68 

S 189.36 

$30297 

1605.94 

$946.78 

$4.893.57 

$3,029.70 

S4.355.20 

$23.11 

S34.67 

$57.78 

SI 15.55 

s184.8s 

$369.76 

3571.75 

SI, 155.50 

S 1.848.80 

$2.657.65 

NIA 

NIA 

WA 

MA 

NIA 

FUA- 

NIA 

NIA 

NIA 

WA 

so.88 

El 32 

$2.20 

$4.40 

$7.04 

$14.08 

$2 1.99 

s43 99 

$70.38 

PlOt.17 

i 

Gsilonage Charge. pr 1.008 Gallons s5.69 SI. 14 511.43 s9 37 NIA 60.36 

Flat R& Rdhdce~I 

Vakncla Tsnscc 

Flat Rdte Residential 

Fltr Genenl'snVice 

Rwse pa Sprinkler Hmd 

$32.72 541.06 WA $40.46 NIA SI 54 

NIA NIA $73.91 NtA NIA NIA I 

NIA NIA 1475.78 NIA , NIA 

Nih NIA $050 NIA N IA 

Ty&l krsidenlhl Bills ML" x 314" Meter I 

3.000 Oallonr $3 I .3% $39.38 m.46 $46.54 $1.77 

5,000 ciauom was 551.24 SSS.S2 562.16 $2.37 

10.800 Gabm WS.63 257.16 595.05 $69.97 $2.66 

(WrrtaruvGnllarage Cap - 6.000 Gallons)

3,000 Gallons 

5.W Gallonr 

10,WO Galkrnr 

(WaweuaUr Gallonage Cap - 6,000 Gallons) 

53K46 

n I f 

$35.44 

$53.16 

sss.60 

stn.19 

sax52 

s561.m 

WS.99 

51,771.89 

S2,835.19 

14,075.58 

$8.53 

S56.44 

547.02 

NIA 

NIA 

NIA 

$35.44 537.87 

n.11 s9.53 

539.44 s37 a7 

$53.16 $56.81 

$38.60 594.68 

S177.19 

aam 

518936 

~302.97 

$567.03 3605.94 

~15.99 9~4678 

st.ni.89 si.s93.~7 

$2.835.19 $3,029.70 

f4.075.58 $4.355.20 

18.53 ,Slt.43 

S56.44 W A 

147.02 N!A 

NIA $73.91 

NJA S475.78 

NIA 50.50 

$34.66 

$3.93 

934.66 

s551.99 

$86.65 

$173.24 

1277.28 

$554.56 

f866.50 

s 1.733.00 

$2,772.80 

~3,985.90 

S10.72 

$6 I .84 

$6 1.84 

NIA 

NIA 

NIA 

rvaieol Resklentiai B~HS 5/8" a 314- maw 

S6.n $56.77 $66.46 56 I .45 

570 99 $70 99 $85.52 379.31 

178.10 178.10 S95.03 588.24 

50.92 

$0.24 

50.92 

$1.38 

52.30 

54.61 

$7.37 

S14.74 

f23 03 

$46.06 

$73.69 

5105.93 

so 28 

0 I .64 

s1.64 

NIA 

NIA 

NIA 

SI .63 

52.11 

s2.35 

50.71 

$0 18 

$0.7 I 

31.06 

$1.77 

$3.54 

$5.66 

511.32 

S 17.69 

$35.37 

S56.59 

f81.3S 

10.22 

SI .26 

51.26 

NIA 

NIA 

NIA 

SI 25 

SI 62 

SI 80

3.oeO Gallons 

5,ooO Gallom 


529.41 

$6.99 

$29.4 I 

m.il.td 

nrS3 

S147.07 

$235.31 

5470.63 

573535 

S1.470.70 

$2.353. I3 

U.382.61 

s10.78 

r 

S35.82 U1.87 

510.34 $9.53 

533.82 $37.87 

U0.74 $%.81 

w.57 $94.68 

S169.14 $189.36 

$210.63 5302.97 

5541.26 $605.94 

S845.71 5946.78 

Sld9i 42 SId93.57 

z?,ms s.029.m 

S3.890.27 $4,355.20 

s12.40 $11.43 

. . 

. . . . 

f34.66 10.92 .", 50.71 

... 

s8.93 50.24 so.IB 

. . 

. .. 

$34.66 ~ ' . . .SO.s2 .: .~ ' 'sO.71 .:; 

351.99 31.38 51.06 I 

f86.65 $2.30 S1,17 1 

'S173:H) , . ,S4.6lF ,JJ.G. . i 

$277.28 

S554.36 

5aM.io .. 

$7.37 ,~ 

S14.74', 

sa.03 '' . 

15.66'. 

E1 l:3?: i 

~17.69 

5 I .733.00 S46.06 ' $35:31 

s2.772.80. . six64 SS6.59 

S3.985.?0. $105.93 $8.1.35' , 

510.72 

SO.28 ~' , .$0.22 . ' 

. . 

$39.73 $45.69 NIA J61.e 51.64 ." ~51.26 

$83.33 $95.84 NIA $61.84 51.64 :S1.26 . 

.. 

. . 

$5 18.69 E596.54 .WA ' NIA NIA :NIA !' 

~, 

' NIA NlA .$73.9r NIA kIA NIA' 

WA MA 1475.7% NIA WA NIA' ' , . 

NlA .. NIA w.50 .: NIA NIK .wA. . 

. 

~VDiaSerianri.lllrHIy8 " 134 4" Meter . 

S56.38 364.84 ~, 566.46. $661.45, , SI .63 .$l.25 

$74.36 

$83.35 

$85,52 

'195.86 

$115.52 

S95.05 

$79.3 I 

586.24 

52.11 . $1.62 

.: ~52.35 : ' 11.110 

(Warrewater Gailonagc Cap - 6,000 Gallons) , I . .. 

. .- 

. , . : 

.. 

.. 

.. 

i

LE'@ LE'S 

, .'. 

. , 

98's VIN 

r6is . VIN.. 

: 91,"lS ..VlN 

os-. -. vm 

. ' P8'88S VR.( 

Oa19s: QlN 

298fS VM 

.BOOS VtN itis . wiis 

VIN VIN. , VIN . 

VIN QIN VtN .QIN 

> .. 

000s VIN ' '6VOS oros 

vm 

i

S19,04 s39.m S37.87 FJ4.66 M.92 $4.71 

. . . 

s19.04 539.02 

~ 8 . ~ 7 558.55 

E17.59 S97.52 

$952 I S195:IO 

E1234 S312.17 

ssw.w S624.39 

S476.02 ~975.44 

$37.87 

$56.81 

. t94.ba 

'. SIS9.36 

5302,97 

$6QS.94 

'w6.i~ 

,s34.66 

SSt.99' 

$86.65. '' 

$0-92:.. . 'SO.71 

S1.36' SI .06 

S2.30 .. $1.77 

S9s7.B 

s6.w 

SOB0 

si,9s*.~ $I.WIS~ 

Sd.05 $3,029.70 

~0.~0 a3ss.m 

si.733.w . ~46.~6 535.37 

S2.72.80 573.69 156.59 

1 ~3,985.90; '. ..sros.91 .. 581.35 

y1.05 ' $830 Si 1.43 

SO.28 50.22 

si0.n .. . 

NIA WA S73.31 NIA NIA. ;"'. ~ NIA 

N/A NIA s475.78 NIA . : NIA' NIA 

NIA ' NIA .$O.H, ': Nit? NIA . NIA 

. . .. . 

Tm& Residential~BilIs x jic keter. 

S7.9.21 S59.87 s64.46 $61.43 $1.63. 

. . 

St:25.' 

535.99 

139.38 

$73.77 

sso.72 

S8S.52 

S95.05 

1679.31 

$88.24 

s2.11. 

$2.35 

". 51.62 

'' $1.80

Bm FlCiliW Chwge by Meta Si: 

5m" x 24" 

34" 

I" 

I-lW 

Y' 

3" 

4" 

6" 

E? 

IB" 

Caibnage Cltarg~ per I .OOO Cnllons 

pJ8t Ilpoe ResldWiuf 

Flat Rare Residential 

Flat Rate G m l Suvice 

Reus per Sprinkler Htad 

512.65 

$330 

$12.65 

512.65 

$12.65 

SI265 

s12.65 

S 12.65 

S12.65 

312.65 

Sl2.65 

SIZ.65 

SuI.58 531.87 534.6 

S285a 

Su1.58 

528.58 

528.58 

528.58 

$2858 

R8.5.s 

aa.58 

S28.58 

m.58 

$3787 

556.81 

S94.68 

5 189.36 

s302.w 

5605 94 

S946.78 

$1.893.57 

$3,029.70 

64.35520 

$34.66 

ss I .w 

S86.65 

$173 30 

~77.2a 

5554.56 

s866.50 

s1.733.00 

$2,772.80 

93.?85.90 

$3.80 $8.59 511.43 s10.72 

NIA 

NJA 

MIA 

- ~. . . . ..... . , . .l. .- 

NJA $73.91 NIA 

NJA $475.78 NIA 

NJA $0.50 NIA 

S3 1.65 $71.53 $85.52 . ~79.31 

$35.45 w.12 595.05 $88.24 

_. ._ 

$0.92 50.7 I 

50.24 50.18 

$0.92 50.71 

5138 $1.06 

$2.30 11.77 

$4.61 $3 54 

17.37 55.66 

si4.74 $11.52 

$23.03 $17.69 

S46.06 $35.37 

$73.69 SS6.59 

$105.93 $81.35 

so 28 $022 

NIA NIA 

NIA NIA 

NIA NIA 

SI .63 $1.25 

$2.1 I $1.61 

12.35 $1.80

-in 

I* 

3* 

4' 

6' 

8' 

10" 

Gallonage Charge, pa 1,000 Gallons 

pac Rote Mienriat 

Flnt Rate Resi&ntlal. 

Flat Ra(t; G d Senia 

Reuse par Sprinkler Head 

$3.87 

m.m 

94355 

Sn.58 

$145.17 

$B2.l7 

5464.94 

5125.84 

I 1,451.68 

$2,322.70 

15.338.87 

$la64 

NIA 

NIA 

NIA 

$33.04 537.87 $34.66 M.92 $0.71 I 

1 

510.09 s9.53 58.93 ED.24 $0.18 

ssaa 

549.8 

s%Zdo 

s I4520 

S26432 

5528.64 

$626.00 

5 1.65 I .99 

52,643.20 

9,199.59 

s37:gl 

SSaSl 

w.68 

Sl89.36 

$334.66 

S51,W' 

uL6.65 

SI 73.30 

. . $0.92 

$1.38 

$2.30 

$4.61 

$0.7 I 

S1.06 

51.17 

53.54 

um.97 s277.28 n.37 95.66 

$605.94' 5554.56 $14.74 $11.32 

E944.18 2866.50 523.03 $17.69 

si.m.57 si.733.m 346.06 $35.31 

$3,029..70 $2.772.80 $73.69 $56.59 

s4.355.20 $3.985.~ ' SI OS.^ $81.15 

$11.11 $11.43 S10.72 M.28 M.22 

NlA $73.9 I 

NIA 5475.78 

NIA ED.50 

TrDksl Residential Bills 98'' I 514" Meter 

NIA UIA N/A 

NIA NlA NIA 

NIA NIA NIA 

3,008 Gallons SSS.64 $63.31 $66.46 $61.45 .. SL.63 61.25 

Ipca OallORS $73.38 $83.49 f85.52 579.3 I $2. I I $1.62 

IO.000 Gallons $82.25 S93.58 595.05 $88.24 $2.35 si.ao 

(Waaewater Gallanage Cap - 6,WO Odlono) 

1

ATTACHMENT C

f 

BEFORE THE FLORIDA PuBLrc SERVICE COMMISSION 

In E: Application for increase in 

water/wastewater rates in Alachw Brevard, 

DeSoto. Wee, Highlands, Lake, Lee, 

Marion, Orange, Palm Beach, Pasco, Polk, 

Putnam. Seminofe, Sumta, Volusia, and 

Counties by Aqua Utilities 


ORDER NO. PSC-11-0544-PHO-WS 

ISSUED: November 23,201 1 

Pursurmt to Notice and in accordance with Rule 28-1 06209, Florida Administrative Code 

(F.AC.1, a prehearing Conference was held on November 8, 2011, in Tallahassee, Florida, 

before Commissioner Ronald A. Brise, as €'rehearing Officer. 

APPEARANCES: 

D. BRUCE MAY. JR, ESQUIRE, Holland & Knight, LLP. Post Oftice Drawer 

810. Tallahasset, Florida 323024810 

On behalf of Aaua Utilities Florida. Inc. (AW. 

PATRICIA A CHRISTENSEN, ESQUIRE, Office of Public Counsel, do The 

Florida Legislature. 11 1 West Madison Street, Room 812, TallahBssee, Florida 

32399-1400 

On behalf of the Citizens of the State of Florida l0Wl 

DAVID S. BERNSTEIN, and KENNETH M. CURTIN, ESQUIRES, A h and 

Reese, LLP, 150 Second Avenue North, Suite 1700, St. Petasburg, Florida, 

33701 

On behalf of YES Communities. Jnc. d/b/a Arredondo F m NES). 

JOSEPH D. RICHARDS, ESQUIRE$ Pasco County Attorney's Office, Pasco 

County Board of County Commissioners, 8731 Citizens Drive. Suite 340, New 

Port Richey, Florida 34654 

On behalf of the Citizens of Pasco Countv (Pasu, COUU~V) 

CECILIA BRADLEY, ESQUIRE, Oace of the Attorney General, The Capitol - 

PLOl, Tallahassee, Florida 32399-1050 

On behalf of the Attomev General of the State of Florida fAGl 

RALPH R JAEGER LISA C. BENNElT, and LARRY D. m, 

ESQUIRES. Florida Public Service Commission, 2540 Shumard Oak Boulevard 


On behalf of the Flm'da Public Sevice Commission [Sa. 

. ..

ORDER NO. PSCl I-OWl-PHO-WS 


PAGE 2 

MARY ANNE HEJJON, Deputy General Counsel, Florida Public Service 

CammisSi~rS 2540 Shumard Oak Boul~~ard, Tallahassee, Florida 32399-0850 

Advisor to the Florida Public Service commission. 

1. CASE BACKGROLIND 

PREHEARINC ORDER 

On September 1,2010, Aqua Utilities Florida, Inc. (AID or Utility) completed filing the 

*UII filing rquhme& (MFRs) for its Application for Increased Water and Wastewater 

Rates (Application). The Utility requested the Application be processed wing the proposed 

agency action (PAA) procedures. 

The Commission issued its PAA Order No. PSC-11-0256-PAA-WS (PAA Order) on 

JU~C 13.2011. However, Ms. Lucy Wambsp' and the Office of Public Counsel, Intervenors, 

timely filed their protests of portions of the PAA Order. Also. AUF and Pasco County (another 

htervenor), timely filed their cross-petitions mncuning portions of the PAA Order. Pursuant to 

Section 120.80(13)@), Florida statutes (F.S.), any issue not disputed is deemed stipulated. 

By Order No. PSC-I 1-0309-PCO-WS (Order Establishing Procedure), issued July 25, 

201 1, the Application w8s scheduled for f od hearin2 to be held November 29 and 30 and 

Decemba 1, 7, and 8, 2011. with a Rehearing Conference scheduled for November 8,2011. 

This Rehearing Order sets forth the agreements reachcd by the parties and the decisions reached 

bythe- . g officer for conduction of the formal hearing scheduled as set out above. This 

Order also lists those issues that wcre not disputed by the parties and are deemed stipulated 

pursuant to Section 120.80(13)@). F.S. 

II. CONDUCT OF PROCEEDINGS 

hrrsuant to Rule 28-106.21 1, FAC., this prehearing Order is issued to prevent delay and 

to promote the just, speedy, and inexpensive determination of all aspects of this case. 

III. JURISDICTION 

This Commission is vested with jurisdiction ova the subject matter by the provisions of 

Chapter 367, Florida Statutes (F.S.). This hearing will be governed by said Chapter and Chapter 

120, F.S., and Chapters 25-22, 25-30, and 28-106. F.A.C., as well as any other applicable 

provisions of law. 

' Ma Wmbsgan su!mquently withdrew as a pany. 

1 

Service Hearings were held in GrceMcra (Augusr 29,201 1); Nwth Ft Myers (August 30.201 I); Scbring (August 

31. 2011); Ovicda (September 1. 2011); Cainerville (Scptc&r 12. 2011); Palatka (Sepamber 13,2011); EuStis 

(Seprember 13,2011);Chiplcy(Septembcr 15,2011);NswPortRichcy(October 11,ZOll);and LaLeland(octobu 

12.2011).

ORDER NO. PSC-I 1-0544-PHO-WS 


PAGE 3 

IV. PROCEDURE FOR HANDLING CONFIDENTIAL INFORMATION 

Information for which proprietary confidential businas Somation status is requested 

pursuant to Section 367.156, F.S.. and Rule 2522.006, FAC., shall be treated by the 

hnmkion confidential. The information shall be exempt from Section 119.07(1). F.S., 

pending a formal ruling on such request by the commission or pending return of the information 

to the person providing the information. If no determination of confidentiality has been made 

and tbe information has not been made apart ofthe evidentiary record in this proceeding, it shall 

be returned to the person providing the information. If a determination of cohfidentiality has 

been made and the information w not m t d into the record of this procding, it shall be 

returned to the person providing the information within the time period set forth in Section 

367.156, F.S. The Commission may deternine that continued possession of the information is 

necessary for the Commission to conduct its business. 

It is the policy of this Commission that all Commission h dgs be open to the public at 

all times. The Commission also recognizes its obligation pursuant to Section 367.156, F.S., to 

protect proprietary confidentd business information from disclosure. outside the proceedhg. 

nerefoxe, any party wishing to use any proprietary confidential business infdon, as that 

term is defined in Section 367.1 56, F.S.. at the hearing shall adhere to the followhg: 

When confidential information is used in the hearing, parties must have copies for 

the Commissioners, necessary M, and the court reporter, in red envelopes 

clearly marked with the nature of the contents and with the confidential 

information highlighted. Any parfy.wishing to examine the confidential material 

that is not subject to an order granting confidentiality shall be provided a copy in 

the same fashion as provided to the Commissioners, subject to execution of any 

appropriate protective agreement with the owner of the material. 

Counsel and witnesses are cautioned to avoid verbalizing confidential information 

in such a way that would compromise confidentiality. Thmfore, confidential 

information should be presented by written exhibit when reasonably possible. 

At the conclusion of that portion of the hearing that involves confidential infodon, all 

copies of confidential exhibits shall be retunred to the proffering party. If a confidential exhibit 

has been admitted into evidence, the copy provided to the court reporter shall be ~tained in the 

OfIice of Commission Clerk’s confidential files. E such matedal is admitted into the evidentiary 

record at hearing and is not otherwise subject to a request for ddential classification filed 

with the Commission, the source of the information must file a request for confidential 

classification of the information within 21 days of the conclusion of the hearing, as set forth in 

Rule 25-22.006(8)@), F.A.C., if continued confidentiality of the information is to be maintained. 

V. PREFJLED TESTIMONY AND =ITS: WITNESSES 

Testimony of all witnesses to be sponsored by the parties (and Staff) has been prefded 

and will be insated into the record as though read after the witness has taken the stand and

ORDER NO. PSC-114544-PHO-WS 


PAGE 4 

affumtd the correctness of the testimony and associated exhibits. Au: testimony remains subject 

to timely and appropriate objections. Upon insertion of a witness' testimony, exhibits appended 

thereto my be marked for identification. Each witness will have the opportunity to orally 

summarize his or her testimony at the time he or she takes the stand Summaries of testimony 

shall be limited to five minutes. 

Witnesses are nminded that, on crossexamination, responses to questions calling for a 

simple yes or no answer shall be so answered fisf after which the witness may explain his or her 

answer. After all parties and Staff have had the opportunity to cross-examine the witness, the 

exbibit may be moved into the mrd. AI1 other exhiiits may be similarly identified and entered 

into the record at the appropriate time during the hearing. 

Tbe Commission fRsuemly administers the testimonial oath to more than one witness at 

a time. Therefore, when a witness takes the stand to testify. the attorney calling the witness is 

directed to ask the witness to affKn whether he or she has been sworn. 

The parties shall avoid duplicative or repetitious cross-examination. Further. friendly 

cross-examination will not be allowed. Crosexamma ' 'on shall be limited to witnesses whose 

testimony is advase to the party desiring to cross-examine. Any psrty conducting what appears 

to be a friendly mss-examination of a witnm should be prepaxed to indicate why that witness's 

direct testimony is adverse to its interests. It is noted that the Intervenors object to these 

provisions on "friendly crossexamination of witnesses," and they may be re-examined at the 

commencement of the technical portion of the hearing. 

VI. ORDEROFWITNE SSES 

As a result of discusions at the prehearing conference, each witness whose name is 

preceded by an asterisk (8) will be excused from this hearing if no Commissions assigned to this 

case seeks to cross-examine the particular witness Parties shall be notified as soon as possible 

as to whether any such witness shall be required to be present at the hearing. The testimony of 

excused witnesses will be inserted into the mrd as though read, and all exhibits submitted with 

those witnesses' testimony shall be identified as shown in Section IX of this Prehesring order 

and be admitted into the record. 

The paaies have agreed that several witnesses may be taken on December 1.2011, ifthe 

Commission agrees. Each witness whose name is preceded by a plus symbol (+) may be taken 

on a day certain. Parties shall be notified as soon as possible as to what date any such witness 

shall be required to be present at the hearing.



PAGE 6 

Witness 

+Diane Loughh 

*Ryan Schwarb 

'Richard Lott 

Benjamin L. Pilk 

+Patricia Canico 

+Tom R ad~ 

+CaitlynEck 

+Gary P. Miller 

+oinny W e Montoya 

+Josie Penton 

+Daniels Sloan 

Kimberly D o h 

+Je* S. ereenwell 

+Blmca Rodriguez 

'Rhonda L. Hicks 

*Kathy L. Welch 

Paul W. Stallcup 

Witness 

Rebuttal 

Dcnise Vaudiver 

Earl Poucher 

Proffered By 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

STAFF 

Issues # 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

16 

14,24,26 

Proffered BY Issues # 

OPC 

1.2.8,20,22.24.26.39 

OPC 1,2,24,26,39

ORDER NO. PSC-I J-05WPHOWS 


PAGE 7 

Witness 

Stan F. Szczygiel 

Preston Luitweiler 

susanchambers 

William Troy Rendell 

Fnmk Seidman 

SumIemental Rebuttal 

Witness 

Preston Luitwciler 

susanchambers 


VII. BASIC POSITIONS 

- AUF 

ProfferedBy Issues# 

AUF 1,2,8,9, 10, 11, 14, 15, 16, 17, 

18,19,21,22,23.24 (objected) 

and 25 

AUF 

I,& 3, 10,39 

AUF 

AUF 

AW 

L5 39 

Proffe-red By Issues # 

AUF 1,2, 3, 10.39 

AUF 

AUF 

4,5,6,7, 12,13.20,24 

(objected), 26,27.28,29, 30,3 1. 

32.33,34.35,36,37,38 

4,5,4 7 

1,2, 39 

4,s. 6, 7. 12, 13,20,24 

(objected). 26,27.28,29,30,31. 

32.33.34.35.36.37.38 

AUF currently operates 60 jurisdictional water utility systems and 27 

jurisdictional wastewater systems in the following Florida counties: Alachua, 

Brevard. DeSoto, Hardee, Highlands, Lake, Lee, Marion, Orange, Palm Beach. 

Pasco, Polk, plbnam, Suninole, Smter, Volusie. and Washington S i rates 

were last established in Docket No. 080121-WS, AUF has invested over 11 

million dollars in capital to comply with Commission directives and applicable 

fderal, state and local regulations. As a result of these investments and AUF's 

ongoing quality control initiatives, including aesthetic water quality improvement 

projects. AUF's overall quaIity of service has improved significantly since the last 

rate case. 

At the same time, despite ongoing efforts to conml and reduce expenses, AUF 

has continued to experience significant decliing rates of return which necessitate 

rate relief. The decision to seek rate relief wa not an easy one to make, but was

ORDER NO. PSC-1 I &WPHO- WS 


PAGE 8 

- OPC: 

required in order for AUF to makitah its financial integrity. The rate relief 

requested is not excessive; rather, it is the minimum required to enable AUF to 

provide adequate and efficient service, and an opportunity to earn a fair rate of 

return on its investment as provided law. 

Although ALJF is not opposed to the implementation of the cap-baud rate 

structue set forth in the PAA Order, the Commission may want to consider a 

state-wide unifonn rate to address some of the af€odability concerns expressed in 

this case. The Commission has previously found that uniform rate siruchres 

would address affordability and fairness. 

AUF has requested two rate increases in less than u three year period and barely a 

month after the last requested rate increase had been in place for a year. AUF's 

back to tiack rate increases are unfair and unreasonable, and will cau~e customers 

to pay unaffordable rates. Several issues have mntributed to AWs ummamab ' le 

rate haease cycle. These issues are: AWs unsatisfactory quaiity of service, 

AWs use of higher used and useful percentages than the systems require, AUFs 

inclusion of pro forma plant adjustments in the test year for projects that have not 

been started. and Am's requested increases in opesating -s that are too 

high and not justi6ablc. 

On the Commission's website, the Commission's mission statement states that it 

is committed to making sure that Florida's mmunem receive some of their most 

essential services - electric, natural gas, telepbone, water, and wastewater -- in a 

safe, affordable, and reliable mariner. The Commission should exen% its 

regulatory authority over AUF in the key areas of rate basdemnomic regulation 

and service issues by finding that it provides unsatisfactory Service at 

dordable rates. 

AUF's customers have ConsistentIy testified at the customer meetings held in 

October and November 2010 and the Service Hearings held in August, September 

and October 201 1 regarding their dissatisfaction with AUF's quality of product 

and service. But for AUF providing a monopolistic service, based on the 

testimony received customers, would be choosing another water and wastewater 

provider and AUF would be going out of business. In fact, customers have 

testified to installing wells to avoid pying AUF's high costs. AUF customers 

have reported problems with the water quality and AUF has had interactions with 

the Department of Environmental protaction PEP) for 45% of its systems in the 

last three years. AUF customers have testified to numerous billing problems 

including high bills, back billing and malfunctioning meters. AUF has been under 

a monitoring plan since its last rate case, yet analysis of the customws' testimony 

from the last two years show no marked improvemenL Based on Am's 

persistent quality of service problems. the company's return on equity should be 

decreased by 100 basis points, which is consistent with past Commission 

practice.



PAGE 9 

~e~~~~requestedhigheruredandusefulpercentages~~justifi~~~ 

the mount of Plant that it has in SerVh? for the c-t customer base. Higher 

used and useful pemntwes d t in rates that are hi& than they should be. 

Ghen that Am's rates are some of the highest rates in Florida, rhe Commission 

should apply the correct used and useful percentages. In addition, dl the pro 

forma adjustments for Lake Josephine Leisure Lakes, Peace River, and Sunny 

Hills should be denied if AUF cannot dernornate it has started construction or 

pmvide 0th- relwant do~umcntati~a. 

MOMva, AUF has requested operating expenditures that are too high and 

uojdfied. AUFs affii allocation methodology, revenues, costs, and charges 

are significantly ovemtated. First, AUF's methodology has failed to charge its 

non-regulated affiliates appropriately, thereby causing AUF Florida's customers to 

pay higher than fair costs. second, AUF's affiliated custs are significantly higher 

than Florida's average costs for equivalent seMa The PAA Order included 

adjustments for affiliated lT costs, incentive compensation, and salaries and 

wages that should continue to be made. Bad on Citizens" affiliate costs 

analysis. AUF's requested increase in affiliated costs should be denied in almost 

its entirety for a reduction of $976,845. 

AUF's requestedmte case expense is also too high. While AUF has the right to 

hire any attorney they want to represent them, AUF custmnem should not have to 

contribute more than the avemge cost for engaging such an attorney in Florida 

In addition, AUF bas failed to justify all of its mte case expense. Even though 

customers may d v e some benefits fram having periodic rate to ensure 

rates are based on current costs, AWs "pancaked" rate caw are too fresuent to 

justify the customers' bearing all of the rate case expenses. Thmfore, the 

Commission should make Citizens' adjustments to rate case expense. 

AUF has used billing determinants that are too low. Due to customers' installing 

welts the projected revenue fiom the last rate case was 16% less than expected. 

Given that the Icvcnue shortfall was due to AUF's actions and its poor quality of 

service and product, the current customers should not be. penalized. Therefore, 

the billing determinants should be adjusted higher. Similarly, AWs actions have 

caused higher costs that have rermlted in inrreased bad debt expense. Thus, 

AUFs requested bad debt expense is too high. "'he Commission should use the 

appropriate three year average and exclude the test year period which is being 

tested. This will result in a reduction in bad debt ex- 0€$3 10.8 16. 

Based upn Citizens' analysis of ALP'S requestal hneases, A Ws requested 

used and useful paccntagcs, pro forma plant inneases and operating nipendbe 

increases will result in rates that are not af€ordable within the meaning and intent 

of fair, just, or reasonable rates pursuant to Sections 367.081 and 367.121. 

Florida Statutes. These. statutes quire the ratemaking process to pmduce rates 

that an fair. just, and reasonable. Even if the individual components would .


DOCUTNO. 100330-WS 

PAGE 10 

- YES: 

otherwise be reasonable when reviewed in isolation, if the end d t 

unaffordable rates, then iiuther cost reductions must be made under the statutory 

constraint that rates must be e, just, and reasonable. The Commission should 

make dl of CStk.m‘ recommended adjustments resulting in further reductions of 

approximately $2.3 million from the PA4 Order which appved a $2.6 million 

increase. 

AUF is entirely undeserving of any rate increase. AUF’s quality of service, as 

defined in Section 367.081, Florida Statutes, is unacceptable. AUF provides poor 

quality water and wastewatrr service; commits preaatory metering and billing 

practices against its customm resulting in exaggerated and inaccwte bik, 

employs rude and condescendcn ’ g customer service rqmsentatives; and faib to 

provide affordable service. AUF exemplifies everything a dty provider should 

not be. Am’s application for rate increase should be denied and the Monitoring 

Program (the “Monitoring Program’? imposed by this Commission in Order No. 

PSC-09-0385-FOF-WS, orda NO, PSC-10-0218-PAA-WS, and Order NO. PSC- 

104297-PAA-WS should be Contirmed 

P,, 

Counfv: Pasco County contends that the rate base., the net oprating income WOO, and the 

revenue requirement approved in Order No. PSC-11-0256-FAA-WS arc 

overstated. Since the rate base, NOI. and the. revenue requirement are overstated 

the resulting rates are unjust and unreasonable. Monover, the PAA Order 

approved rates are Imaffanlable. pasco County protests the pontions of the PAA 

Order relating to rate base, NOI, and rcvenue reqUiranent arcas and quality of 

senrice and the other issues listed in the office of Public Counsel’s Petition and 

Pre-hearing Statement. 

The Commission’s finding of marginal quality of service provided by Aqua to its 

customers in the PAA Order should be set aside. Aqua’s quality of service should 

be found to be unsatisfactory. The Commission should lower Aqua’s return on 

equity (ROE) by 100 basis points based on its less than Satisfactory qdty Of 

service. Pursuant to Sections 367.081 and 367.121, Florida Statutes, the 

Commission has the authority and duty to pmcrii and fix just and reasonable 

rates and charges. Adjustment should be made to rate base, NOI, and revenue 

requirement to d e the rates and charges just and nasonable for the customers 

of Aqua. 

The AG believes that the citizens of Florida deserve clean, healthy water at a fair 

and reasonable me. The testimony o ff4 at the Public Hearings demonstrates 

that Aqua has failed to meet these requirements. The testimony of its customers 

show that Aqua has not met the water quality standards, with numerous customers 

testifying that they m o t drink the water or use the water to showa, wash 

clothes and dishes or give to their pets.

ORJXR NO. PSC-114544-PHO-m 


PAGE 11 

STAFF: 

ncse who can afford the cost have put in filters or use bottled water. he 

customers who cannot afford these costs use as little water as possible, sometimes 

b e g infrequenty ad only flushing the toilet when they have to. h WBS 

testimony fium customers who collecwl bath water to flush the toilet and couples 

who used the toilet at the same time so they would only need to flush once. Some 

Persons testified about having sewage back up in thek toilets and tubs and one 

person tedfied that his plumbers traced the sewage block to rhe Aqua pipes. 

Many customers testihcd of the problems with mde customer savicc and the 

hardships they endured when Aqua tinally billed them for several months of 

scrvice totaling hundreds or thowads of dollars. Many of these customers 

testified that they were told they must pay the bill in fhll immediately or enter into 

a payment plan with the r e d warning that ifthey were a “day late or a dime 

short, [Aqua] would turn off their water.” 

Other customers testified that they could not afford the rates but when they tried 

to rent or sell their horn=. the kct that Aqua fumished their water prevented them 

fium ge- any interest from those looking to rent at buy. Some small busiiess 

persons testified that they war. having trouble with theii rental Properties because 

the renters were unable to afford the Aqua bills despite the fact that they were 

trying to use as little water as possible. Many customers testified to the number of 

water heaters, coffee posts and other appliances that had to be replaced because of 

the water. In summary, many customers cannot a&rd or otherwise decide not to 

use the Aqua water. 

Staffs positions are preliminary and based on materials filed by the parties and on 

discovery. n e preliminary positions an offered to assist the parties in preparing 

far the hearing. Staft‘s final positions will be based upon all the evidence in the 

record and may differ from the preliminary positions. 

Vm. ISSUES AND POSITIONS 

QUALITY OF SERMCE 

ISSUE 1: 

POSITIONS 

m: 

What is Am’s quality of service? 

The quality of service provided by AUF is good and has significantly improved 

since the last rate case. In 2009, the Commission granted ATJF rate relief and 

found that the quality of service was marginal for Am’s systems that are paa of 

the current rate case. Sime that time, the Commission and its Staff have CIOS~IY 

monitored AUF’s quality of service. At no time during this two-ycar monitoring 

period has the Commission or its Staff found Am’s qua& of service to bc 

unsatisfactory. In fact, the Commission has fouud that ”preliiary results show 

substantial impvmmt in Am’s customer service.” See Order No. PSC-IO- 

0218-PAA-WS (emphasis added). AUF is committed to providing quality service

ORDER NO. PSGI1-0544-PHO-WS 


PAGE 13 

- YES: 

EuStis, Oviedo, Palatka Gainesville, Sebring, and New Port Richey &ce 

hearings testified that the water is unusable. They testified that thek mter 

smelled, tasted bad, aod left residue. Of particular concern a~. the customm's 

complaints regarding the lack of timely boiled water notices and timely response 

to leak hazards which increase the potential for health problems. 

Moreover, ALJF's systems have on-going issues with DEP. Over the last three 

year years, AUF has had multiple DEP compliance issues. The overall view of 

AUF's systems related to DEP show persistent water quality problems. Since 

2007, AUF has had 26 primary water quality violations, 20 total colifom 

violations, 15 secondary violations and I5 violations for late or not reported 

parameters. Over the last 18 months (January 2010 through July 201 I), AUF has 

continued to have DEP violations: 3 primary water violations, 6 total colifom 

violations, 2 secondary violations, and 1 violation for late or not report 

parameters. The AUP wastewater systems have been out of significant 

compliance 39 times since 2007. And over the last 18 months (January 2010 

through July 201 I), AUF has been out of significant compliance I 1 times. Over 

the last three years, DEP has identified 183 instances where the Company issued 

boil water notices. Contrary to the Company's self reporting that customers 

rewived timely notice of these boil water incidence, multiple customem testified 

that they never saw nor received a notice h m 

the ntility. Many customers 

testified that they only received a stop boil water notice, and never dized that a 

potential health hazard event had even o c c d (Wdmk, Vandiver, Powher, 

Dir;mukes) 

Unsatisfactory. (Kurz. Harpin, Gray, Starling, Green) 

- Parco 

Countv: Aqua's qdity of service is unsatisfactory. Over the last few years. the County 

has mxived numerous complaints fbm Aqua customers regarding poor quality 

service, poor water quality and exorbitant rates. Aqua has failed repeatedly to 

properly and fully inform its customers of raquired boil water orders in the 

Jasmine Lakes and Palm Terrace service areas. A survey completed by 340 

customers from the Palm Terrace and Jasmine Lakes service indicate that Aqua 

has been inconsistent in notifying customers of the need to boil wate-r. According 

to the surveys, 137 customers stated that they never received any form of boil 

water notice; 78 received notice via letter size piece of paper and 92 received a 

door hanger. Only 17 received a phone call from Aqua (Mho) 

- 

AG: Aqua's quality of service is unsatisfactory. The AG agrees with the other 

interveners that Aqua has not met the staudard on this ism. See the Ao's 

position statement 

- STAF"F: No position pending further development of the record. (All Staff Witnesses 

except Welch and Stallcup) 

~ 

1 i



PAGE 14 

ISSUE 2: What., if any, additional actions should be taken by the Commission based on 

AUF's quality of service? 

POSITIONS 

- A m The quality of service provided by AUF is good and has significantly impved 

since the last case. No Mer action should be taken by the Commission. For 

over two yem now, An's service quality has been the focus of a rigorous and 

m p d d review by the Commission, its staff, the OPC, and other parties. 

AUF has timely complied in all respects with the monitoring reporting 

requirements imposed by the Comrmss . ion and, in so doing, has in-d 

Significant costs. The results of that monitoring clearly show that AUF has good 

customer service and consistently complies with environmental requirements. 

The evidence also shows that AUF has been proactive in establishing quality of 

service performance goals to ensure that its good customer service will be 

maintained into the fhture. Additional monitoring is unnecessary and would not 

be cost-effective. Moreover, 0F"s recommwdation to penalize AUF with a 

return on equity reduction is unwarranted, and if adopted. would result in 

confiscatory rates. (L,uitweiler. Cham- Rendell) 

The Commission should reduce AUF's ROE 100 basis points for its 

unsatkfktwy service. Also, a Monitoring Plan should be reinstituted to address 

the quality of service problems regarding water quality, billing problems and 

customer service. 

Based on the testimony at the Service Hearings in August. Septemkr and 

October 2011, comments &ed at the customer meetings in October and 

November 2010, customer corr=spondence, and DEP reports, Florida customers 

are not getting an adme quality water product or service that they are paying 

for even though they pay some of the highest water rates in the state. Not only is 

the water quality for many systems unsatisfactory, the customer service and 

billing is also m.ds&atory. The Commission should reduce AUF's ROE 100 

basis points for its unsatisfactory product and service. 

Section 367.111(2), Florida Statutes, provides that a public utility shall provide 

service an& 

. . .such service shall not be less safe, less dficient, or less 

sufficient than is consistent with the approved engineering design 

of the system and the reasonable and proper operation of the Utility 

in the public interest. If the Commission finds that a utility has 

.failed to provide its customers with water or wastewater service 

that meets the standads promulgated by the Department of 

Environmental Protection or the water management districts, the


WCRET NO. 100330-WS 

PAGE 15 

commission may reduce the utility’s return on equity 

standardsawmet 

While the Commission is.not limited to only situations where the Company has 

failed to meet DEF’ standards. them is sufficient evidence in this case to find that 

AUF has failed to provide over the course of m y years quality water that 

consistently meets the DEP staodanls. 

In Am’s last mte case, the Commission reduced AUF’s ROE by 25 basis points 

for its marginal service for all systems, except the Chuluota system which was 

reduced 100 basis points for its unsatisfactory service. Based on the 

Commission’s concerns. a Quality of Service Monitoring Plan WBS implemented. 

The Commission has a history of reducing ROE for poor customer service 

including a 1% or 100 basis point reduction for Pine Island Utility and 

Consolidated Utilities Company, 50 basis points for Aloha Utilities and Ocean 

Reef Club, and a 25 basis point duction for Southem Statea Utilities (the 

predecessor for most of the AUF systems). Given AUF’s on-going, and persistent 

poor quality of service in both product and customer service, AUF’s ROE should 

be reduced by 100 basis points. 

In a wmpelitive market, the Company would have lost customers due to its poor 

customer service. In fact, some customers have testified that they have installed 

wells, significantly reduced their usage and in extreme circumstances sold or 

abandoned thcii homes, all because of the poor quality of plDduct and service 

provided by AUF. Other customers testified that they cannot sell homes in part 

due to the Company’s reputation for poor water quality, high bills and poor 

customer service. Many AUF customers have done evnything thq can to 

signal to the company their dissatisfaction short of not buying AUF‘s duct or 

service which they cannot do since this is a monopoly service. &Spite the 

customers’ overall dissatisfacton with its senice, AUF has not done enough to 

improve its product or service to change their customer’s opinion 

Unforhmately a 25 basis point deduction to its ROE for most of its system was 

not sufficient to get the compaay to significantly improve its product and 

quality of service such that they would be acceptable to the customers. 

A reduction of 25 basis points amounts to a reduction in revenue of less than 

$90,000 on a combined basis, which is less than .01 percent of AUF America’s 

2010 total revenue and .6 percent of AUF Florida’s 2010 total revenue. In 

contrast, a 100 basis point reduction would be approximately 2.6 percent of AUF 

Florida’s total revenues, but would still be only .05 percent of Aqua America’s 

total revenue. The reduction of a 100 basis point is ne cess^ to effect the 

change in Am’s behavior that is long overdue withut Creating financial 

jeopardy. (Woodcock, Vandiver, Poucher, Dismukes) 

the

ORDER NO. PSGl1-0544-PHO-WS 


PAGE 16 

yEs: AUF should be denied any rate incmse. Further, the Monitoring Program should 

be continued. (Kun, Herpin, Gray, Stark Green) 

- PeseO 

- AG: 

- STAFF: 

RATE BASE 

The Cammission should lower Aqua’s return on equity (ROE) by 100 basis points 

because of its less than satisfactory quality of service. (Mariano) 

The Commission should lower Aqua’s return on equity (ROE) by 100 basis points 

heawsc of its less than satisfactory quality of service. 

No position pending fiatber development of the record. 

ISSTIF, 3: what is the appropriate amount of pro forma plant. and related depreciation and 

property taxes, for the following specific protested pro forma plant projects; 

Breeze Hill Wastewater I&I Project, Lake Josephine 81ad Sebring Lakes AdEdge 

Water Treatment Project; Leisure Lakes AdEdge Water Tnatmcnt Project; Peace 

fiver Water Treatment Project; Tomoka View Twin Rivers Water Tment 

Plant Tank Lining Projtct; Sunny Hills Wata System Water Tank Replacanent 

w=f? 

POSITIONS 

- AUF: 

The appropriate amouut of pro forma plant, and reW depreciation and propeaty 

taxes, for the following specific protested pro kma plant projects: Breeae Hill 

Wsstpwater I&I Project, Lake Josephine and Sew AaEdge Water 

Trecltment Proje Lei- Lakes AdEdge Water Treatment PrOJect; Peace River 

Water Treatment Project; Tomob Twh Rivm Water Treatment Plant Tank 

Lining Aoje Sunny Hills Water System Water Tank RepWmt Project me 

set forth below:



PAGE 17 

Fundmg Project Description ProFonna 

Additions DeprExp 

I I I 

1 & I study & improvement, collection 

syslem - Breeze Hil 

Ncw taok liners - Tomoh & Twin 

Rim 

Secondary Wata treat - Scbring Lakes - 

Lake Josephine 

Secondary water qwli - Lainure 

78,165 

48,066 

373,354 

1,737 

1,375 

16,988 

Lakes 

Gross alpha treatment - Peace River 

105,799 

235,392 

4,814 

10.710 

1,095 

5,703 

1,616 

4,076 

Additional Storpge - Sunny Hils W 267.885 7,662 4.487 

Pmtesfed Pro Forma Plant Total 1,108.661 43.285 I8216 

(Luitweiler) 

- OPC A proforma plant project should not be included in this rate proceeding if the 

physical consFNction of the project has not begun. Even though a project has 

bwn planned and equipment purchased, the project for any number of resso~ls 

might not be constructed BS planned or even constructed at all and placed into 

service. To date, construction has not begun on the Lake JosephindSebring 

Lakes Water Treatment Project and the Leisure Lakes Water Treatment ProjeCr 

Construction has begun on the other protested proforma projects, and therefore, 

the pmper documented costs should be included for recovery in this proceeding. 

These. projects include: Breeze Hill Waswater I&I Project, Peace River Water 

Treatment Project, Tomoka Twin Rivers Water Treatment Plant Tank Lining 

Project and the Sunny Hills Water Systems Tank Replacement Project 

(Woodcock, Dismukes) 

- YIES: 

- PaseO 

Yes defers to the Office of Pubtic Counsel's position on this issue. 

Conntv: Pasco County adopts and incorporates by reference the position statement of the 

Office of Public Counsel for this issue. 

&: 

STAFF. 

The AG concurs with the Office of Public Counsel. 

For mn-testifying StaE, the following table reflects staffs recommended p ht 

amounts for AUF's protested pro forma plant projects.



PAGE 18 

In addition, for non-testifying Staff, the following table reflects staffs 

corresponding adjustments to accumulated depreciation, depreciation expense, 

and properq taxes. 

lSSUE4: What are the appropriate used and useful prrcenfagesd the associated 

composite used and useful percentages for the following specific protested water 

treaiment and related facilities of Arredondo Estates, Arredondo Farms, Breeze 

Hill, Cartton Village, East Lake HanidFriendly Center, Fern Terrace, Hobby 

Hills, Interkhen/Fark Manor, Lake JosephindSebring Lakes, Picciola Island, 

Rosalie Oaks, Silver Lake EstatedWestern Shores, Tomoka View, Twin fivm, 

Venetian Village, Welaka, and zephyr Shores? 

POSITIONS 

- AUR 

The appropriate used and useful percentages and the associated composite used 

and useful percentages for the following specific protested water treatment and 

related facilities are as follows: 

Arredondo Estates 

Amdondo Farms 

Breezc Hill 

Carlton Village 

East Lake HarridFrieudly Center 

Fairways 

100.00 

100.00 

100.00 

.95.00 

100.00 

100.00



PAGE 19 

Fern Tmffi 

Hobby Hills 

InterlachenlPark Manor 

Lake JosephindSebring Lakes 

Piooiola Island 

Rosalie Oaks 

Silva Lake EstatewWestern Shores 

Tomoka View 

Twin Rivers 

Venetian Village 

Wetaka 

Zephyr Shores 

(RendeIl. Seidman) 

100.00 

100.00 

100.00 

85.00 

75.00 

100.00 

94.00 

100.00 

100.00 

74.00 

80.00 

100.00 

The proper calculation c- -.f 1 I percentages r water treatment an Etorage 

plant should be. based upon the resuiremcntp of Swtion 367.081(2Xa), Florida 

Statutes, and Codssion Rule 25-30.4325, F.A.C. 

The U&U percentage of utility plant should be. re-evaluated in each rate 

proceeding in order to account for changes to utility plant and changes to 

customer growth and usage of utility facilities. Over time there can be mated 

changes in the growth of the d c e area, bow the system is opaated, and the 

usage panems of the customer base. There also may be new or different 

information submitted in the MFR's that corrects inaccurate information from a 

prior case. 

The growth alIowmce in the U&U calculations relies upon some projection of 

historical five ycar data Since the five year historical data will change, it is not 

unreasonable to expect that this growth allowance will change from rate. case to 

rate c~se. This will sometimes increase the U&U percentage, and sometimes 

decrease the UBtU percentage. However, the change in system growth should be 

evdd in every rate case and incorporated into the U&U calculatiom, whether 

or not the change increases or decreases the U&U percentage. 

Commission Rule 25-30.4325 (2). F.AC., requires the Commission's U&U 

evaluation of water treatment and storage faciiitics to consider whether flows 

have decreased due to conservation or to duction in the number of customers. 

Staff has relied upon this d e to justify not adjusting flows down, which would 

produce a U&U percentage lower than the previous order. Ignoring a decrease in 

system flow data does not effectively capture the portion of the system that is 

actuaUy serving custom. Capacity that is not used as result of a decline in 

customer usage should not be considered U&U, because it is no longer providing 

service to customers.

ORDER NO. F'SGlI4544-PHO-WS 


PAGE 20 

Commission Rule 25-30.4325 (4), F.A.C.. provides tbat water treatment plants 

should be considered 1 OW+ U&U if the service territory the system was designed 

to serve is built out and there is no apparent potential for expansion of the 

Service taritory. Staff has stretched the interpretation of this rule beyond its 

msonable limits in deteig systems to be 100% U&U which are not built out 

and where a potential does exist for expansion of the service temitq. 

If a system is served by a single well that is greater than 150 gpm, and the 

calculated U&U percentage is less than 75%, the Commission should utilize an 

alternative calculation, as permitted by Commission Rule 25-30.4325 (3), F.A.C. 

For these few systems (four), the Commission should recognize the actual U&U 

of the treatment facilities, so that the cost of the significant stranded treatment 

capacity is not borne by the ratepayers. 

For two systems, Silver Lake Oaks and Lake JoscpbindSebring Lakcs, OPC does 

not recommend a tire flow allowance because there are insuEicient hydrants in 

the system to provide complete coverage or the lines are undersid to provide 

fire flow. 

Consistent with the requirements of Section 367.081(2)(a), Florida Ststutes, and 

Commission Rule 25-30.4325 (3), F.A.C., the calculated U&U should be used for 

systems that are built out but have a calculated U&U percentage of less than 75%. 

This gives recognition to the fact that there is a large amount of stranded capacity 

in these systems that will never provide service to the customers. 

Properly applying the requirements of Section 367.081 (2) (a), Florida Statutes, 

and Commission Rule 25-30.4325, F.A.C., results in the following U&U 

peacentages for the protested systems: 

a Arredondo Estates -80% 

b. Amdondo Farms -6 1 % 

C. B=~Hill-26% 

d. Carlton Village - 91% 

e. East Lake HarridFriendIy Center - 41% 

f. F~111Terra~e-68% 

g. Hobby Hils -41% 

h. Interlacheflark Manor - 76% 

i. Lake JosephindSebring Lakes - 25% 

j. Picciola Island - 56% 

k. Rosalie Oaks - 12% 

1. Silver Lake Estates/ Western Shores - 74% 

m. Tomoka View - 43% 

n. Twin Rivers -24%

ORDER NO. PSC-1 I -0544-PHO-WS 


PAGE 2 I 

- YES: 

County: 

- AG: 

STAFF: 

ISSUE 5: 

0. Venetian Village - 63% 

p. Welaka-74% 

4. Zephyr Shores - 26% 

~oodwck, Dismukes) 

Yes defers to the Office of Public Counsel’s position on this issue. 

Pasco County adopts and incorporates by reference the position statement of the 

Oace of Public Counsel for this issue. 


No position pending further development of the m d . 

What are the appropriate used aud useful pacentages and the associated 

composite used and useful percentages for the following specific protested water 

distribution systems of Anedondo Estates, Beechefs Point, Breeze Hill. Gibsonia 

Estates, hterlachdark Manor, Kingswood, oakwood, Orange HiWSugar 

creek, Palm Port, Palms Mobile Home Park, Peace River, Piney Woods 

Ravemod, River Grove, Rosalie Oaks, Silver Lake EstaWestem Shores, 

Silver Lake Oaks. Skycrest, Stone Mountain, Sunny Hills, The Woods, Twin 

Rivers, Venetian Village, Village Water, Welaka, and Wootens? 

POSITIONS 

- AUF The appropriate used and usefkl percentages and the associated composite used 

and usefulpcrcentages for the following specific protested water distribution 

systems are as follows: 

Arredondo Estates 

Beechefs Point 

Breeze Hill 

Gibsonia Estates 

Interlaohen/park Manor 

Kingswood 

Oakwood 

Orange HilVSugar Creek 

Palm Port 

Palms Mobile Home Park 

Peace River 

Piney Woods 

Ravenswwd 

100.00 

Ioo.00 

100.00 

100.00 

83.00 

100.00 

100.00 

100.00 

100.00 

88.00 

100.00 

100.00 

100.00

. . . -. 

ORDER NO. PSC-I 14544-PHGWS 


PAGE 22 

- OPC 

River Grove 

Rosalie Oaks 

Silver M e Estatesnvestern shores 

Silver Lake Oaks 

skycm 

Stone Mountain 

Sunny Hills 

'Ihe Woods 

Twin Rivers 

Venaian Village 

Village Water 

Welaka 

wootens 

(Rendell, Seidman) 

100.00 

100.00 

100.00 

87.00 

100.00 

54.00 

13.00 

16.00 

IOO.OO 

85.00 

100.00 , 

52.00 

66.00 

The U&U percentage of water distribution systems should be calculated 

according to the concepts presented in Issue 4, and should be mevaluated for 

each new rate case to produce the most tlcQrmte percentage. The percentage 

should not be inappropriately rounded up, but only rounded to the nearest full 

single percentage point. This level of accuracy avoids overstatiug, and in some 

cases, grossly overstating the UdtU percentage of treatment facilities. 

Generally, the U8cU percentage should be the fiaction of the total number of lots 

with active customem over the total number of lots served by the water 

distribution system. If the service tenitoq includes commercial or multi-family 

customers, a comparison should be made of the active number of customers to the 

total numb of customers to be served by the water distribution system at 

buildout, based upon the sentice area maps provided in the MFR's. 

The proper UBCU percentages for water distribution plant for the protested 

systems are as follows: 

a 

b. 

C. 

d 

e. 

f. 

g. 

h. 

1. 

j. 

k. 

1. 

Amdondo Estates - 90% 

Beecher'S Point - 58% 

BIWZE Hill - 92% 

Gibsonia Estates - 84% 

Interlacheflark Manor - 79% 

Kingsw~od - 98Yo 

oakwood -98% 

orange Hiwsugar creek -94% 

Palms Mobile Home Park- 79% 

Palm Port - 94% 

Peace River - 79% 

Piney Woods - 89%



PAGE 23 

- AG: 

STAFF: 

ISSUE 6: 

POSITIONS 

m. 

U 

0. 

P. 

9. 

r. 

9. 

t. 

U 

V. 

W. 

X. 

Y. 

z 

Ravenswood - 88% 

River Grove - 99?? 

Rode O&- SQ?? 

Silver Lake Estates/westem Shores - 88% 

Silva Lake oaks - 83% 

skycrest - 9Y/a 

Stoae M o - 48% ~ 

Sunny Hills - 1 IYo 

Twin Rivers - 98% 

Venetian V i e - 81% 

Vi- Water - 68%% 

Welaka -51% 

wootens - 43% 

The Woods 7 70% 

(woodoock, Dismukes) 

Yes defers to the Office of publio Counsel's position on this issue. 

Pas00 County adopts and incorporates by refmnce thc position statement of the 

OflGce of Public Cormst1 for this issue. 

TheAGco-WiththeOffceofPublkCod. 

No position pending finrha developwnt of the record. 

What are the appropriate used and useful mtages and the associated 

composite used and useful percentages for the foilowing sp@c pmtested 

wastewater treatment and related fscilies of Arredondo Farms, B m Hill. 

Fairways, Florida C h t d Chmmerce Park, Holiday Haven, JunsJe Den. Kings 

Cove, Leihe Lakes, Maningview. Palm Part, Pcace River, Rosalie oaks, Silver 

Lake Oaks, South Seas, Summit Chwe, Sunny Hills, The Woods, Valmcia 

Tensloe, Venetian Village, and Village Water? 

The appropriate used and usefid pemntagea and the associated composite used 

and usem pmcentages for the following specitic pmt@ wastewater treatment 

and related feoilities are as follows: 

Arredondo Panns 100.00 

Bras Hill 56,00 

Fairways 100.00 

Florida Central Commerce Park 100.00

ORDER NO. PSC-I l-O%PHO-WS 

DOCKETNO. lW330-WS 

PAGE 24 

Holiday Haven 

Jungle Den 

Kingp Cove 

Leima takes 

Morningview 

Palm Port 

PcaceRiva 

RosalieOaks 

Silver Lake oaks 

soum scao 

c*lmn.,i+ Pi.-..- 

ORDERNO. PSC-I 14544-PHO-WS 


PAGE 12 

- Opc: 

75.00 

100.00 

100.00 

39.00 

.I 00.00 

58.00 

1 bbm 

1 wxoo 

. . 42.00 

1w).oo 

.-* 

to its customers and has made substantial investment in order to improve service 

quality, including ongoing water quality improvement projects that have 

improved the aesthetic quality ofthe water. (Luimiler, Chambers, Rendell) 

Am’s overall quality of service is unsatisfactory. AUF has on-going poor water 

quality issues, billing problems, and poor customer service. Dtspite an on-going 

mo&oring program, AUF still has persistent. deeply embedded poor quality of 

service issues in FIorida As testified to by AUF’s customers at the service 

hearings and summmzd . by OW’S witnesses, water quality, billing problems and 

poor customer service are the main problems. And !he testimony confirms that 110 

significant improvements have been made. 

Am’s quality of service. problems affect al of its systems. which were found to 

have ”marpinal” quality of senice in the last rate case (Docket No. 080121-WS) 

with the exception of the Chulwta system. ID. the previous ratc case (Docket NO. 

080121-WS), the Chuluota system’s quality of service was found to be 

msat&Wory and remains unsatisfactory today. However, since the Chuluota 

system is not part of Aqua’s Petition for rate increasC in the current docket 

(100330-WS), it should not be included in tbe Commission’s decision in this 

docket on the quality of service. 

Customers af the customer meetings held in October and November 2010 

complained about the poor quality of the plant maintenace., including unkempt 

property, odors from plant facilities, lie breaks, and malfunctioning lift Station 

alarms. They also oomplained about poor customer service relating to rude 

customer service representxtives, billiig problems, and difficulties in reaching a 

Company r e e v e in an emergency situation. Despite the Company being 

under a Monitoring Plan during the historic test year, the customer complaints did 

not decrease significantly in 20 10, only 19% when compared to the previous year. 

During the SeMce. Hearings held in August, September and October 201 1, the 

customers still complained about the poor quality of plant maintenance. warn 

quality, and customer service. Based on the customers’ testimony these 

hearings Wing issues (icluding back billing, high bills, and malfunctioning 

meters) are a significant problem. Customem should he able to rely on accurate 

and timely bill-. AUF has failed to have any meaningful plan or procedure to 

~ - ._. 

. 

1. 1- .L- ,.,.m,.l.;n+ -mrlc 

^^

ORDERNO. PSC-I I-0544-PHO-WS 


PAGE 25 

f. e. 

$3 

h. i. 

j. k. 

1. 

m. 

n. 

0. 

P. 

r. 9- 

S. 

t 

Holiday Haven - 62% 

Jungle Den - 37% 

,King8 cove - 46% 

LcisUnLaLes-32% 

M~mingvieW - 33% 

Palm Port - 51% 

Pea~e River - 56% 

RosalieOaks-50% 

Silva Lakc Oaks - 34% 

south seas - 40% 

SMMit chase - 36% 

Sumty Hills - 23% 

Valencia Tare~e - 40% 

venaian viuage - 49% 

village water - 64% 

TheWOodS-62% 

f(lvoodcock,Dismulrffi) 

Yea defers to the Office of Public Counsel's position on this issue. 

Pasco county adopts and iIKqmmm by refereace the poSit'm sbtcmmt of thc 

office of Public Counsel for this issue. 

The AG wncurs with the office of Public Counsel. 

No position pending fMher developeat of the record. 

What are the approprhte used and useful peroentagas end the associated 

composite used and usefdptroentsgw for the foliowing specific protested 

wastewatu collection systems of Bcccher's Point, Brene Hill, Fairways, Holiday 

Haven, Jungle Den, Peace River; Rosalie Oaks, Silver Lake oakg- Sunny Hilts, 

The Woods, and Village Watd 

- AUF The appmpiiate uscd and useful percentages and the essociated composite'.used 

and usefol percentages for the following specific pnimed wastewrrtcr collection 

systems are 8s follows: 

Beocher's Point 

Breeze. Hill 

Fainway0 

Holiday Haven 

100.00 

100.00 

100.00 

75.00 

. .

: 

. . 

. .. . 

. . 

. , 

. . 'Jungle Den . , 100.00 .. ~. 

-. peace&' . . .100.00 . . . . 

we- ~' 

.. . ' . 100.00 

... :: ~SilVerLalreOaks ~. ,.&7.m 

, ' (p.en&4.seiaman) 

. .. 

~' :' .. 

:sImIiyHitls .. 

'. 55.00 

The woods. .. 

village wm. 

7 1 .00. 

58.00 

.: . . . 

'. . . 

. . 

-* OPC. .Utilizing the .me concepts presenred in Issue 4, .the. U&.U 

wastewater coUection. pht ~ should 

be .~catculattd ' in 

. 

the. 

cal~ngtheU&Upercentagefmwaterdiskibutionplont. , . ' . 

. . 

. . 

~. 

~. ' . 

ne proper U&U perantages for: the wasteprotwted 

systems are as follow. 

a .' &echcr's Point - 45% 

6. : BreeZern.-94% 

collboti~n syStems"'of the - ' ~ 

. . 

. . 

. . 

c.' 

&' 

FairwayS-9% ., 

Holiday Hayen -, 69% 

. . C. .JUngle.h-.87% 

.. 

fi ' , PeaceRiwr-79% 

g. '.' Roselie oaks - 93% 

h SilverLakeOaks-.83% 

i. ' .S+y Hills - 36% 

. . 

. . 

. . 

j. . 'VillegeWater-42%. 

__. 

6 , 

. . ' ' 

'TheWoods-61%, 

.. 

(FYoodcoclg.Dismukes) 

... . 

. . 

. .. 

.. , I 

.. . .. 

. , 

yes. . . . Yes defas to the OfEiOe of.F%blk CQwI's position on this i-. " 

.. 

> . 

. .palco 

.. COantv: '. Pesco County adopts and incorporates by. referen& the 'statemeat of* 

.. . -- AG- 


T ~ C 

.. 

AG concurs with the 086~ .. ofpublii CO&L 

. . 

. .. 

, . STAFF: Nopositionpendingfinther.~lopmentoftherecord. . ' 

. . 

. . . 

ISSUE 8: Should any 'kdjustmeats be n&e ,@ Deferred BMe .. ?@~loutIssue) .. 

. . 

.. 

. . 

., 

. . 

.. 

.~ 

. . 

.. 

. 

. . 

.. 

~ . 

. . 

.. 

.. 

. . 

. . 

. . 

. . 

. . . . 

. .~ 

. . . 

. . 

:, 

.. , 

' :. 

. . 

I 

.. , , , 

., I



PAGE 27 

POSITIONS 

- AUF: 

ope: 

_. YES: 

- Pasco 

countv: 

& 

STAF%: 

ISSUE 9: 

POSITIONS 

- AUF: 

-- OPC. 

- YES 

The appropriate amount of deferred rate case expense should be updated to 

include the revised rate case expense addressed in the Rebuttal Testimony of Stan 

Szczygiel. (Szczygiel) 

Deferred Rate Case. expense should be redd by $132,500. 

Disnukes) 


(Vandiver, 




Yes. Consistent with Commission practice, the simple average balance during the 

4-year statutory amortization period of the Commission approved rate case 

expense amount for the instant case. should be included in the working capital 

allOwanCe. 

What is the appropriate Working Capital.allowance? (Fallout Issue) 

This is a fall out calculation issue subject to the resolution of the other protested 

issues in this proceeding. (Szczygiel) 

Working capital allowance should be reduced consistent with OPC’s 

recommended adjustments. This reslllts in a reduction of $733,753 to water 

working capital and $205,108 to wastewater. for &total adjustment of $938,861 I 

(Dimukes) 

Yes defers to the office of Public Counsel’s position on this issue. 

Psseo 

Counw Pasco County adopts and incorporates by reference the position statement of the 


-* AG 

STAFF: 

ISSUE 10: 

The AG concurs with the a c e of Public Counsel. 

The appropriate amount is subject to the resolution of other issues. 

what is the appropriate rate base for the April 30,201 0. test year? (Fallout Issue)



PAGE 28 

POSITIONS 

-* AUF. This is a fall out calculation issue subject to the resolution of the other protested 

issues in this proceeding. (Szczygiel, Luitweiler) 

- OPC. Rate base should be reduced consistent with OPC's recommended adjustments to 

Used and Useful and Pro Forma Plant Adjustments. This results in a reduction of 

$1,882,840 to.water rate base and $3,541,976 to wastewater rate base for a total 

reduction of $5,424.8 16. (Dismukes) 

Yes defers to the Office of Public Counsel's position on this issue. 

- Pasco 

Coon* Pasco County adopts and incorporates by reference the position statement of the 

office of public Counsel for this issue. 

- AG The AG concurs with the office of Public Counsel. 

- STAFF The appropriate amount is subject to the resolution of other issues. 


ISSUE 11: What is the appropriate amount of accumulated deferred taxes to include in the 

capital structure? (Fallout Issue) 

POSITIONS 

- AUF This is a fall out calculation issue subject to the resolution of the other protested 

issues in this proceeding. (Szczygiel) 

- OPC: 

- YES: 

Accumulated deferred taxes should be reduced consistent with OPC's 

recommended adjustments. (Dismukes) 

Yes defers to the Oftice of Public Counsel's position on this issue. 

Coon@ Pasco County adopts and inwrporabs by reference the position statement of the 


- AG: The AG concurs with the Office of Public Counsel. 

STAFF 

The appropriate amount of accumulated deferred taxes is dependent on further 

development of the record and is subject to the resolution of other issues.



PAGE 29 

ISSUE 12: What is the appropriate Commission-approved leverage formula to use in the 

case? 

TYPE B STIPULATION’ AUE and Staff agree that the appropriate leverage formula to use is 

the leverage formula in effect when the Commission makes its final decision 

ISSUE 13: 

POSITIONS 

What is the appropriate weighted average cost of capital including the proper 

components, amounts and cost rates associated with the capital structure? (Fallout 

Issue) 

-* AW. This is a fall out calculation issue subject to the resolution of the other protested 

issues in this case. (Rendell) 

- 

OPC The appropriate weighted average cost of capital including the proper 

components, amounts and cost rates Bssocl(ltM1 * with the capital structure should 

reflect OPC’s recommended adjustments. 

YES: 

- PWO 

Q&y: 

- AG: 

STAFF: 


Pasco County adopts and incorporates by referenm the position statement of the 


The AG concurs with the 05% of Public Counsel. 

The appropriate weighted avemge cost of capital, and proper components, is 

dependent on further development of the record and is subject to the resolution of 

other issues. 


ISSUE 14: 

POSlTIONS 

- AUR: 

-* OPC. 

What are the appropriate billing determinants for the test year? 

The appropriate test year billing determinants to be. used are those contained in 

the MFRs and billing analysis filed in this rate case. Thus, no adjustments to 

annualized test year revenues are appropriate. (Szczygiel) 

Test year revenue should be increased to reverse the test year impact of reduced 

usage that is either due to the Company’s high rates, poor customer service, or 

’ A ryPe B Stipulation is one where the Utility and Staff agm, and the Intervenors take no poshion

ORDER NO. PSC-11-0.544-PHO-WS 


PAGE 30 

factors beyond the control of the customers. The test year revenue should be 

increased by 5372,925. 

Test year revenues have decreased by 16 percent below the Commission’s 

repressed consumption calculations in the last rate case. According to the 

Company, the majority of the reduced consumption was due to the unanticipated 

installation of a large number of private irrigation wells in its service areas. Only 

in a monopoly situation would it be unanticipated that customers would stop using 

a service when the pricing got beyond the ability of the customer to pay. 

Moreover, the reduction in conmption due to customer fmancial hardship, the 

unreasonably high rates, and poor quality of service are factors largely beyond the 

cona~l of the customers and are mort in the control of the Company. Jnherent 

risk for any company is the loss of revenue due to reasons like economic 

downtams, competition, conservation, and alternative suppliers. The ROE 

includes a component to compensate the stockholders for risk. It would be unfair 

to the customers to make the Company whole for lost revenue due to reduced 

sales, under the current circumstances. If the Commission requires the customers 

to bear the risk of lost revenue, then this shift in risk should be reflected in a 

reduction to the ROE. 

Since the increased reduction in consumption has been c a d by the direct 

actions of the Company which have ndted in the high rates and poor customer 

service, the customers should be held Mess. Test year revenues should be 

increased by $372,925. (Dismukes) 

- YES Yes defers to the Office of Public Counsel’s position on this issue. 

- Pasco 

w: Pasca County adopts and incoporates by reference the position statement of the 


&: 

w: 

ISSUE 15: 

POSITIONS 

- AUF: 

Ihe AG concurs with the Office of Public Counsel. 

No position pending evidence adduced at the hearing. (Stallcup) 

What is the appropriate amount of test year revenues? (Fallout Issue) 

The appropriate test year billing determinants to be used are those contained in 

the MFRs and billing analysis filed in this rate case. This is a fall out calculation 

subject to the resolution of Issue No. 14. (Szczygiel)



PAGE 3 1 

The amount of test year revenues &odd be consistent with Ow's recommended 

adjustments. This results in watex test year revenues of $8,756,984 and 

wastewater test year revenues of $4,784,757. (Dismukes) 

- YES: Yes defm to the Office of Public Counsel's position on this issue. 

- Plsw 

Qg&? Pasu, County adopts and incorporates by reference the position statement of the 



STApF: 

The appropriate amount is subject to the resolution of another issue. 

ISSUE 16: Should adjustments be made to the allocation methodology used to allocate costs 

and charges to AUF by Aqua America, Inc. and its affiliates? 

POSITIONS 

- AUF: No. The allocation methodology is a fair, reasonable and accurate method to 

allocate costs and charges to AUF by Aqua America, Jnc. and its &liates. In this 

case, AUF uses the same allocation methodology that was thoroughly analyzed, 

reviewed, and approved by the Commission in AUF's last rate case in Docket NO. 

080121-WS. F~more, no witness appears to have challenged AUF's 

- OPC 

allocation methodology in this case. (Szczygiel) 

Yes, Aqua America should be required to allocate common costs to its non- 

regulated operations so that its regulated operations including AUF do not 

subsidize the non-regulated operations. 

Given that affiliate transactions are not arms length dealings, the Commission has 

an obligation to closely scrutinize cost allocation techniques and methods of 

chargiig affiliates to ensure that the company's regulated operations me not 

subsidizing the non-regulated operations. The standard for reviewing affiliate 

transactions is stated in GTE Florida Iw. v. Deason, 642 So. 26 545 (Fla. 1994). 

In the case, the standard the Court established was whether affiliate 

transactions exceed the going market rate or are otherwise inherently unfair. 

Aqua America, Jnc. (AAI) is the parent company of AUF and is a publically 

traded company with both regulated and non-regulated subsidiaries operating in 

13 states. MI has nine non-regulated subsidiaries. AUF has contracted with one 

of the non-regulated subsidiaries, Aqua Services, Inc. (ASI) to p ~ d e 

managerial, operational, and regulatory support. The costs allocated to AUF from 

AAI and AS1 are approximately 20% of the total operations and maintenance and

ORDEX NO. PSC-11-0544-PHO-WS 


PAGE 32 

Adrqinistrative and General expense included in the test year. AUF allocated 

some of its common costs to its Florida systems in the amount of $1.2 million. 

AS1 and AUF have a service contract that governs the charges to be allocated to 

AUF. There is a Coprate Charges Allocations Manual that describes the 

allocation methodology. AS1 has a combined method for determining the costs 

charged to (he affiliates. “Service. expenses” are the labor and overhead of the 

employees of AAI and AS1 charged to an affiliate or a group of affiliates based on 

the time related directly to work done for them. “SUU~IY expenses’’ are the 

remaining expenses that are direct or indirecf charges and identified by activity 

codes. Despite the stated aIlocation methodology, it appears that it has not been 

uniformly applied between AUF and its affiliated sister companies. 

First, AS1 performs services for non-regulated affiliates; however, it does not 

consistently allocate costs to them. There are four affiliates that do not receive 

allocations from ASL In the last rate ase, the Company acknowledged the need 

to allocate costs to at least one of its non-regulated affiliates. However, all nonregulated 

affiliates should be consistently allocated AS1 costs. 

Seumd, ceaain operating companies provide contract operator services; however, 

no common costs are allocated fm these services. Although several AAI 

subsidiaries provide operator and management services to non-regulated 

companies, neither AAI nor AS1 allocates costs to these client companies. While 

the Company claims it does not allocate costs because no corporate dws are 

provided directly, the Company fded to take into account that the indirect costs 

increase due to the additional oversight and management of the affiliates that 

provide these services. The failure to take these additional costs into account and 

allocate them accordingly, results in an over-allocation of costs to the regulated 

companies without similar allocations to the non-regulated operations. 

Third, there is no allocation of costs made. to non-regulated afFdiates, even when 

they have common officers and directors. The Company has failed to 

demonstrate that the salaries and bene& of these wmmon officers are allocated 

to the non-regulated companies. 

The failure to allocate common costs to AAI non-regulated operations causes AAI 

regulated operations to subsidize the non-regulated opaations. Therefore, the 

costs charged to AUF h m AAI and AS1 are overstated. (Disnukes) 

-* YES. Yes defers to the Office of Public Counsel’s position on this issue. 

- Pasco 

Coontv: Pasco County adopts and incorporates by reference the position statement ofthe 

Office. of Public Counsel for this issuc. 

- AG: The AG concurs with the Office ofpublic Counsel.

ORDERNO. PSC-I 1-0544-PHO-WS 


PAGE 33 

STAFp: 

ISSUE 17: 

Staff witness Welch's position is addressed in the stipulated affiliate audit 

findings. For wn-testifying S e no position pending evidence adduced at the 

hearing. (Welch) 

Should any adjustments be made to affiliate revenues, costs and charges allocated 

to AUF's systems? 

POSITIONS 

- AUF. NO. No adjustments should be made to &lite revenues, costs and charges 

allocated to AWs systems. AUF's affiliated charges are reasonable and fully 

supported by the evidence in the record. In fact, the total charges fiom aliates to 

AUF have actually decreased since the last rate case. See Exhibit SS-4. 

Moreover, the evidence shows that (i) AUF's customers benefit by having 

centralized services pmvided by Aqua America, Inc. and affiliates, and (ii) Am's 

afliliate. charges do not exceed the going market rate, but in fact are below markel. 

See Exhibits SS-2 and SS-5. OPC has not pmvided any credible evidence to 

support its recommended adjustments. The. compmative analysis that OPC tries 

to use to set rates is impermissible under Florida law. Furthermore, OPC's 

comparative analysis is fundamentally flawed fiom an analytical perspective. 

(Szcygiel) 

- OPC 

Yes Affiliate costs and charges allocated to Am's systems should be reduced by 

$976,045. 

Affiliate costs and charges allocated to AUF are overstated. In the GTE case, the 

Florida Supreme Court established the standard for evaluating affiliate 

transactions as whether affiliate tmnsacb 'ons exceed the going market rate or are 

otherwise inherently unfair. In the. current case, AUF offered a seriously flawed 

market analysis to supports its position that its affiliate costs do not exceed market 

ratcs. First, the analysis docs not take into account the likely discount a 

nonaffiliated company would offer. Second, the analysis assumes that every hour 

the AS1 personnel work each day could be billed at a rate comparable to a skilled 

lawyer, consultant, certified public accountant, or professional engineer regardless 

of the level of expertise of the AS1 employee. This is not a realistic comparison. 

Third, companies typically use outside counsel or consultants for specialized 

areas of law or professional savi=, not day to day operations. 

Moreover, the Company's market analysis merely provided a view of the various 

stand alone billing rates for various professional services such as legal, 

engineering, accounting, and management. The analysis includes rates that are 

overstated, a sample that is under representative, and a failure to differentiate 

between levels of skills. Moreover, the. comparison of professional management 

rates excluded normal travel and computer costs associated with day to day

ORDER NO. PSC-I 14544-PHO-PIS 


PAGE 34 

- YES: 

- 

Pasco 

w: 

& 

STAFF: 

ISSUE 18: 

operations without good cause. Correcting for just these inherent flaws in the 

Company’s market analysis reduces the management charges included in the test 

year amount by $79,968. 

In addition, comparing similarly situated Class A, B, and C water/wastewater 

utilities’ management fees further demonstrates that Am’s management costs are 

inherently unfair. Based on this analysis, similar to a comparison of companies 

for purposes of establishing ROE, AUF’s Administrative and General (ACStG) 

expenses on a per customer or equivalent residential connection (ERC) basis are 

significantly higher than the peer group. Reviewing the typical monthly bill for 

AUF as compared to systems oprrating in the same counties shows that AUF’s 

systems rates are 116% higher than average. Given that the layers of management 

associated with ownership by AAI have not produced any cost savings for 

customers, and, in fact, have resulted in excessive costs, test year expenses should 

be lowered to be consistent with costs that other water and wastewater systems 

incur. Using the peer group analysis, Am’s test year expense for AS1 

mauagement fees should be reduced by $664,023 for water opedons and 

$3 12,822 for wasbmam. 

Even when the peer group analysis is not used, adjusting affiliate expenses to the 

level consistent with customer growth and inflation would result in a reduction of 

$882,388 for water operations and $348,674 for wastewater operations. ‘Ihe 

Company has provided no documentation on the increases in management fees 

and customer operations allocations since the previous rate case. AUF has not 

demonstrated any economies of d e 

M other wmmensurate benefits for 

customers to support that Aqua’s business plan of buying small, troubled systems 

and then seeking rate increases is viable in the long term. (Dismukes) 

Yes defers to the Ofice of Public Counsel’s position on this issue. 


Ofice of Public Counsel for this issue. 


No position pending evidence adduced at the hearing. 

What is the appropriate amount of Corporate Information Technology (‘‘IT’) 

charges allocated to AUF by its parent, Aqua America, hc.?

ORDERNO. PSC-11-0544-PHO-WS 


PAGE 35 

POSITIONS 

ope: 

- YES: 

- 

Paseo 

Qy&: 

- AG 

STAFF: 

ISSUE 19 

The appropnate amount of Corporate IT charges allocated to AUF by its parent, 

Aqua America, Inc. are $2,053,657, as appropriately reflected in the MFRs. 

(Szczygiel) 

Corporate Information Technology charges allocated to AUF by its parent, Aqua 

America, is included in the analysis of affilii costs, and thus, are part of the 

$976,845 reduction to affiliate costs recommended by OPC. 

Corporate Informatjon TechnoIogy charges are allocated to AUF from AAI as 

part of its affiliated costs. Based on the peer group analysis, AUF's allocated 

aftiliare costs are significantly overstated and have not resulted in savings for 

customers. Based on the peer p up analysis, AUF's test year expense for AS1 

management fees, including IT wsts, should be reduced by $664,023 for water 

operations and $312,822 for wastewater. Even when the peer p up analysis is 

not used, adjusting affiliate expenses to the level consistent with customer growth 

and inflation would result in a reduction of $882,388 for water operations and 

$348,674 for wastewater operations. (Dismukes) 



Office of Public Cowl for this issue. 



Should any adjustments be made to Incentive Compensation? 

- AUF No. No adjustments shouldbe made to Incentive Compensation. The appropriate 

incentive compensation amount is set forth in the MFRs and reflstr a pay-forperformance 

compensation structure thai drives quality and efficiency thus 

benefiting customers. Moreover, AUF's pay-for-performance compensation 

stnactum is consistent with past Commission precedent. (Szczygiel) 

- OPC: The incentive compensation of $22.623 in bonus and dividend compensation for 

MI'S corporate management aligns the interest of management with 

shareholders, and therefore should be borne by shareholders. Thus, O&M 

expense should be reduced by $2,623.

ORDER NO. PSGl I-0544-PHO-WS 


PAGE 36 

- YES: 

AUF included in its h4FR’s incentive compensation for $22,623 in bonus and 

dividend compensation for its affiliate management at MI. This type of 

incentive compensation aligns the interest of the executives with the shareholders. 

Moreover, the Company has not justified the amount of affiliate charges in this 

case. Incentive compensation charges are allocated to AUF from AAI as part of 

its affiliated costs. Based on the peer pup analysis, AUF’s allocated affiliate 

costs are significantly overstated and have not resulted in savings for customers. 

Based on the peer p up analysis, AUF’s test year expense for AS1 management 

fees, including incentive cornpensation costs, should be reduced by $664,023 for 

water operations and $312.822 for wastewater. Even when the peer pup 

analysis is not used, adjusting afliliate expen.% to the level consistent with 

customer pwtb and inflation would result in a reduction of $882,388 for water 

opemtiom and $348,674 for wastewater operations. @ismukes) 


-: 




STAFF: 

ISSUE 20 

AUF 

_. 

- OPC: 


Should any adjustments be made to Salaries and Wages - Employees expense? 

No adjustments should be made to salary and wages The appmpdate salary 

expense amount is contained in the MFRS and is consistent with past Commission 

precedent (Rendell) 

Yes, the Commission should deny any increase in common in light of the 

economic climate in Florida and throughout the US. Denying the requested 

increase would re& in a total adjustment of $220,410 for salaries and wages and 

$16,861for the related payroll taxes. 

AUF requested an increase in salaries and wages totaling $220,410 and $16,861 

for related payroll taxes. These requested in- included five adjustments: 

two for normalization of the 4% increases for direct salaries and “admin” salaries; 

two for the pro forma efkcts of the 4% direct and “admii“ salaries; and pro 

forma increases to salmies based on a utility market study. 

CPI for 2010 over 2009 has been less than 2%. Numerous customers at the 

service hearings testified that they have had trouble paying their c-t bills,

ORDER NO. PSC-1 I -0-PHO-WS 


PAGE 37 

YES: 

- Pasco 

COnntv: 

- AG 

STAFF: 

ISSUE 21: 

POSLTIONS 

much less any increases. They also testified that due to the economy th9 have to 

work more than one job to pay their bffls or have had their hours cut. When 

ratepayers are. suffering in these dBicult economic times, they should not be 

forced to pay for Aqua’s salary increases. The Commission should deny any 

increase in compensation in light of the economic climate in Florida and 

tbroughbut the U.S. Denying the requested increase would result in a total 

adjustment of $220,410 for salaries and wages and $16,861 for the related payroll 

taxes. (Vandiver, Dismukes) 

Yes defers to the Office of Public Counsel’s position 00 this issue. 





Should any adjustments be made to Bad Debt expense? 

AUF. Yes. To be consistent with Commission precedent, AUF agrees that an 

adjustment of $3,199 should be made to reflect the appmpnate three year average 

for Am’s bad debt expense. OPC has not pvided any credible evidence to 

support its recommended adjustments. OPCk at(empts at using a comparative 

analysis to set rates are impermissible under Florida law. Furthermore, OPCs 

comparative analysis is fundamentally flawed tiurn an analytical perspeftive. 

(S=wgiel) 

- OPC 

The bad debt allowance should be reduced to $78,605 =dhg in a $310,816 

adjustment which is consistent with good billing, customer scrvicc, and meter 

reading practices. AUF’s requested test year bad debt level is $389,421. 

significantly greater than the average for comparable water utilities and results 

from its poor service and billing pwtices. 

AUF‘s requested test year bad debt level is $389,421. Using a three-ycar average 

of the Company’s bad debt the Commission made a reduction to the requested 

bad debt of $3,199. However, this methodology does not account for the 

Company’s significant contribution to the reason bad debt is so high due to its 

unsatisfactory customer service, p r 

billing practicCs, and meter reading 

practices. Considering these specific circumstances, the three year average 

unjustly penaliza customers for AUF‘s bad service by imposing higher bad debt.

I 



PAGE 38 

YES: 

- Pasco‘ 

m: 

- AG: 

STAFF: 

ISSUE 22: 

POSITIONS 

AUF: 

Moreova, the three year average used in the PAA Order to test the 

reasonableness of the bad debt level was flawed. The average included the full 

tat Year pied and a second period which included six months of the test year, 

thereby double counting six months of the test year. In addition, the inclusion of 

the test y m includes test year expenses that inappropriately distort the average. 

If the test year is abnormally high or low, it will mise or lower the comparative 

average. It is incomct to include in the average the data that is beiig tested for 

reasonableness (i.e. the test year bad debt). In addition, the average used in the 

PAA Order included some outliers that should not have been included, such as the 

bad debt of $172,880 for the year ending April 2009 for wastewater Rate band 2, 

which is 45% of the total system bad debt for that period. The bad debt for prior 

and post April 2009 period was significantly less ($27,979 for 2008 and $8,746 

for 2010). Correcting for the inherent problems with the time periods used in the 

PAA Order, the test year bad debt would be. reduced by $81,633. 

However, the three. year average still includes the impacts of Am’s poor 

customer Service and billiig practices that have been on-going since 2007. The 

testimony overwhelming demonstrates that customers are still experiencing 

billing problems associated wit?^ untimely or inadequate information, meter 

resding inconsistencies, and estimated bills which undoubtedly have lead to 

higher bad debt expenses in the test year as compared to companies with good 

billing practices. In fact, comparing AUF’s test year bad debt expense to the 

avaage for comparable companies’ results in a reduction of bad debt of $310,816 

to a level of $78,605. (Dismukes) 

Yes defers to the Offce of Public Counsel’s position on this issue. 



Tbe AG wncm with the Office of Public Counsel. 


What is fie appropriate amount of rate case expense? 

The appropriate amount of rate. case expense is $1,422,607. AUF has attempted 

to use the Commission’s PAA process to minimize rate case expense in this rate 

case. OPC, however, has turned the PAA process on its head by propounding 

excessive discovery, ignoring precedent, and attempting to re-litigate a number of 

settled issu- including but not limited to Used and Useful calculations, corporate



PAGE 39 

allocations, bad debt expense calculations. and cost-of-service ratPmakins 

principles. (Szczygiel) 

Rate case expense is overstated and should be reduced by $265,000. Ratepayers 

should not have to pay any more than those costs that are reasonable and 

n~~arY. The MFRs included $670,268 for rate case expense and further 

inweased this amount to $1,249,320, as of July 3 1,20 1 1. This expense requested 

by the utility is inflated with cats that the ratepayers should not have to bear. 

Further, while a rate case benefits the ratepayers through the continuation of safe, 

adequate and proper utility service, it also benefits shareholders, because the 

Company has a renewed opportunity to earn a fair return on equity. Therefore, the 

Company should be required to share rate case expense 50/50 between ratepayers 

and stockholders, the same as in a 2007 case for an AUF affiliate in New Jersey. 

The specific expenses that the company included in rate case expeme included 

expenses to correct MFR deficiencies, prepare for issues that are. not in the current 

case, and expenses that did not have any supporting documentation. These costs 

should be removed. 

The Company also included excessive rate case expense. associated with bringing 

unnecessary Aqua persons to the service hearings. To the extent that Aqua 

believes that it is necesw to have 5 or more employees attend these service 

hearings that is a cost the Company should bear, not the ratepayers. 

The Company also fnrstrated the discovery process and caused u n n v delay 

and costs because it produced hard copies of documents. Mod if not all of these 

documents were available electronically. The inefficiency and intentiod 

obfuscation should not be permitted and the Commission should disallow all costs 

included in the rate case associated with producing unnecessary hard copies of 

documents that are available electronically during the discovery process. This 

would include the costs of printing and compiling the documents as well as the 

persbns that monitored the on-site reviews at the law office of Holland and 

Knight. 

The company also included inflated costs in rate case expense due to the fact that 

it keeps its books and records out-of-state. The Commission has maintained in 

prior dockets that rate case expense should be disallowed when it is incurred due 

to the books and records beiig maintained out-of-state. The Commission has 

stated “We do not believe that the ratepayers should bear the related costs of 

having the records located out of state. This is a decision of the shareholders of 

the Utility, and therefore, they shall bear the related costs. Therefore, all of these 

costs should be removed from rate case expense.” See Order No. PSC-10-0400- 

PAA-WS, p. 23.

. ORDER NO. PSC-I 14544-PHO-WS 


PAGE 40 

Rate case expense also includes $51,817 for corporate capital charges This 

includes time spent by in-house which also charged time to Operation and 

Maintenance expenses. Without proof as to where their time was charged during 

the test year to verify that these are not double counting salary expense, these 

charges should be removed from rate case expense. 

Rate case expense also included charges related to the Quality of Service issues 

from the last rate case. Because the commission found in the last case that the 

quality of service was marginal, it required a monitoring program. The Company 

should not be allowed to recover charges related to this monitoring program that 

was a result of its marginal service provided. Therefore, these costs should be 

removed. 

Approximately 42% of the rate case expense was attributable to le& fees. These 

legal fees included some of the higher rates in the state based on a survey 

published by the Florida Bar. If a Utility chooses to hire a law firm that charges 

some of the higher rates in the state, the shareholders should bear some of the 

burden. Customers should not have to bear any unreasonable costs. If the full 

amount of all reasonable or unreasonable expense is passed through to the 

ratepayers as rate case expense, the utility has no incentive to hold costs to a 

reasonable level. Therefore, these excessive costs should be removed from rate 

case expense. 

These adjustments bring the revised requested rate case expense of $1,249,320 to 

$809,275. If this adjusted amount is split 50/50 between the ratepayem and 

shareholdas, the amount that should be allowed in expenses in $404,638. 

The Commission should also defer the rate case expense approved in this 

proceeding until the rate case expense &om the prior proceeding has been fully 

amortized. The Commission should not encourage Utilities to file rate cases one 

on top of another with little time in between. The burden of ”pancakinp” rate 

cases is placed squarely on the shoulders of ratepayers. Yet, again, it is the 

stockholder that benefits the most from rate cases. (Vandiver, Dmukes) 


ppsco 

w: Pasco County adopts and incorporates by refercncc the position statement of the 


- AG The AG concurs with the Office of Public Counsel. 

STAFF: The appropriate amount of rate case expense is subject to the evidence adduced at 

the hearing. However, only prudently incurred rate case expense should be 

allowed and amortized over four years. 

..

ORDER NO. PSC-I 1-0.544-PHOWS 


PAGE 41 

ISSUE 23: What is the tat year pre-repression water and wastewater operating income or 

loss before any revenue. increase? (Fallout Issue) 

POSITIONS 

- AUF: 

- OPC: 

This is a fall out calculation issue subject to the resolution of the protested issues 

in this case. (Szczygiel) 

The test year pre-repression water and wastewater operating income or loss before 

any revenue increase should reflect OPC's recommended adjustments. 

- YES: Yes defers to the Wice of Public Counsel's position on this issue. 

- Pasco 

County: Pasco County adopts and incorporates by reference the position statement of the 


AG: 

STAFF: 

ISSUE 24: 


The appmpriate amount is subject to the resolution of other issues. 

Are the total operating expenses prudently incurred such that the resulting rates 

me affordable within the meaning and intent of fair, just, and reasonable pursuant 


As stated in the Rulings Seetion of this Order, this issue is excluded and stricken, and a new 

issue, Issue 31A is added. The positions of the parties set out below were the positions the 

parties took at the Preheariug Coufcrence on the Proposed Issue 24. 

POSITIONS 

AUF: 

- OPC: 

AUF objects to the inclusion of this issue in this rate case. OPC impmpdy seeks 

to introduce a new rate setting criteria - "aEoniability" - as a backdoor attempt to 

reduce Am's revenue. quirement. This novel criteria is found nowhere in 

relevant statutes or the rules, and is not supported by Commission precedent. The 

c0urt.g have made it clear that this issue has no place in setting a water or 

wastewater utility's revenue requirement. 

NO. AUF has overstated its operating expenses such that the resulting rates are 

not affordable within the meaning and intent of fair, just, and reasonable pursuant 

to Sections 367.081 and 367.121, Florida Statutes. The Commission should adopt 

the Citizens' recommended adjustments resulting in a total reduction of $2.3 

Million from the PAA Order. (Vandiver, Poucher, Dismukes)



PAGE 42 

sections 367.081 and 367.121, Florida Statutes, require that rates are fair, just and 

reasonable, as well as compensatory and nondiscriminatory. The language of 

SeCtions 367.081 and 367.121, Florida Statutes, includes the concepts that the 

=Suiting rates be affordable. Rates are the end product of the ratemaking process 

The construction of the statutory language requires that the Commission evaluate 

whether the end result of the ratmaking process produces a fair, just and 

reasonable result. Embedded into the language is the implicit dcnowledganent 

that, while an individual cost on its o w may be prudently incurred, that same cost 

may not be considered prudently iacwed when evaluated as part of a group of 

costs. Simply reviewing the individual inputs for prudency and assuming that if 

the individual inputs are prudent the end result the-refore must be prudent is a false 

assumption As with any budgets like the. state. budget, if the end result would 

caqe the rates (or in the state example - taxes) to go higher than Floridiaus cau 

afford and stifles economic activity, then cuts must be made to individual 

expenditures that may have been considemf reasonable on their own. Therefore, 

the Canmission has an obligation to determine if the end results, i.e. final rates 

approved, are fair, just, and reasonable such that the rates are affordable to 

customers and will not caw mdue hardship. In fact, the Commission already 

recognizes this concept in describing its mission on its webpage wha! it states that 

it "is committed to maki sure that Florida's consumers receive some of their 

most essential services - electric, natural gas, telephone, water and wastewater - 

in a &e, affordable and reliable manu&'. (Emphasis added.) 

Almost all of Aqua's customers testified that Aqua's rates are unaffordable. 

Customers testified that their neighborn are moving out of Aqua developments. 

Others testified that they or their neighbors have been unable to sell their existing 

properties because of the high Aqua rates. In addition, customers indicated that 

AUF's rates are contributing to a downward spiral in the numbex of occupied 

homes in developments served by AUF due to their high rates and poor qusfity of 

service. In fact, the combdon of Am's poor service and high rates have 

caused AUF customers to organize against them. 

As indicated in previous issues, AUF has overstated its rate base and net operating 

expenses which is leading to some of the highest rates h the state. While AUF's 

business model has been to buy small, troubled systems and supposedly bring 

better management and economies of scales. the peer group analysis of 

comparable Class A, B, and C water and wastewater companies demonsbates that 

AUF has not delivered these benefits to its customers. Therefore, the 

commission should make the Citizens' recommended adjustments resulting in a 

total reduction of $2.3 Milion from the PAA Order. (Vandiver, Powher, 

Dismukes) 

No. AUF's water and wastewater rates are unaffordable to its customers. 

Accordingly, AUF should be denied any rate increase. (Kun, Harpin, Gray, 

Starling)

ORDERNO. PSC-ll-0544-PHO-WS 


PAGE 43 

- Pasco 

county: 

&: 

- STAFF 

Pasco County adopts and incorporates by refermce the position statement of the 



Staff does not believe that this issue as worded is proper. The prudency of all 

expenscs will already have been determined in prior issues. Once an expense is 

found to be prudently incurred, the applicable statutes and case law require that 

rates be set so as to allow the utility to recover those expenses plus M opportunity 

to earn a fair rate of return on its used and usefid investment. Staff believes that 

this issue could be included as a proper legal issue if reworded. Staff would 

suggest that the issue be reworded as follows: “Are. the resulting rates affordable 

within the meauing of fair, just and reasonable pursuant to Sectiom 367.081 and 

367.121, Florida Statutes?“ SWs final position on this issue will bc taken after 

reviewing the memorandums filed by the parties. (Stallcup) 

REVENUE REouIRElMENT 

ISSUE25 What is the appropriate prprepression revenue requirement for the April 30, 

2010, test year? (Pallout Issue) 

POSITIONS 

-* AUF. The. appropriate pre-repression revenue requirement for the test year is a fallout 

calculation ism subject to the resolution ofthe other protested issues in this case. 

(S=Y.giel) 

-* OPC. Consistent with OF’C’s recommended adjustments, the total water revenue 

requirement should be $8,933,855 and wastewater revenues requirement should 

be SS.I85,208. (Dismukes) 

- YES: 

a 

-: 

- AG: 

STAFF: 


Pasco County adopts and incorporates by refmnce the position statement of the 


The AG wnm with the Office of Public Counsel. 

The appropriate amount is subject to the resolution of other issues.



PAGE 44 

RATES AND CHARGES 

ISSUE 26 What are the appropriate rate cap thresholds to be used to cap residential customer 

bills for the water and wastewater systems7 (Fallout Issue) 

POSITIONS 

- AUF: The appropriate rate cap thresholds to be used to cap residential customer bills for 

the water and wastewater systems are those conwined in the Commission's PAA 

Order and set forth in the direct testimony of Staff Witness Stallcup. The only 

entity that protested this issue in this case was Ms. Lucy Wambsgan. Ms. 

Wambsgan has formally withdrawn as a party from this proceeding. Therefore, 

this issue is deemed stipulated pursuant to Section 120.80(13)@), Florida StaMes. 

- OPC: 

Rate cap residential customer bills shoutd be capped at an affordable level. In the 

last rate case, the Commission found it appropriate to cap the rates. In Order No. 

PSC-09-0385-FOF-WS, issued May 29. 2009, the Commission stated on page 

127: 

Implicit in the rates approved by this Commission in all cases is 

the determination that the resulting bills are affordable. An 

analysis of the results in the table based on our prior decisions 

reveals that the average water bill from the cases presented is 

$33.39, while the corresponding wastewater bill is $44.60. In the 

Affurdability Table, the calculated standard deviation is $1626 for 

the water systems and $19.16 for the wastewater systems. The 

standard deviation measures the spread of the dafa on either side of 

the average. Based on the respective system averages plus 1.96 

standard deviations (which captures approximately 95 percent of 

the variation), the affordabiity limits are $65.26 for de water 

system and $82.15 for the wastewater system. Rounding each of 

these values to the nearest $025 results in affordability values of 

SS5.25 for the water system and $82.25 for the wastewater system. 

AU other factors beii equal. we timi these values, based on OUT 

historical decisions, are reasonable. 

Id. at D. 127. Given that AWs requested rate increase is less than two years 

later, the comparative analysis of the average water and wastewater rates are 

applicable in the present rate case. If less than two years ago the "affordability 

limits" for water was $65.25 for water and $82.25 for wastewter, it is 

unreasonable to conclude that AUF's current increase request will not result in 

rates that exceed these limits. 

Irrespective of staff's previous analysis, Citizens' analysis of AUF's current rates 

shows that they have same of the highest rates in the state without any increases.

ORDER NO. PSC-11-0544-PHO-WS .~~_ 

DOCKET NO. 100330- WS 

PAGE 45 

YES: 

As indicated in previous issues, AUF has overstated its rate base and net operating 

expenses that is leading to some of the highest rates in the state. While AUF's 

business model has been to buy small, tmubled systems and suppostdly bring 

better management and economies of scaIes, the peer pup analysis of 

comparable Class A, B, and C wata and wastewater companies demonstrates that 

AUF has not delivered these benefits to its customers. Citizens contend that the 

overall rates requested by AUF are overstated. Therefore, the Commission should 

make the Citizens' recommended adjustments resulting in a total reduction of 

$2.3 million fiom the PAA Order. (Vandiver, Poucher, Dismukes) 


- Pasco 

m: Pasco County adopts and incorporates by refmnce the position statement of the 


- AG: The AG concurs with the Oace of Public Counsel. 

STAFF 

ISSUE 27: 

POSITIONS 

- OPC: 

- YES: 

- 

Pasco 

Qggy: 

- AG: 

S T m 

The appropriate rate cap thresholds an subject to the resolution of other issues. 

(Stallcup) 

What are the appropriate ete stmctwa for the Utility's water and wastewater 

systems? (Fallout Issue) 

AUF is not opposed to the implementation of the cap band rate structure set forth 

in the PAA Or&. However, in designing the rate structure, the comm*sion may 

want to consider a state-wide consolidated rate structure to address some of the 

affordability concerns expressed in this case. The Commission has previo~~ly 

found tbat uniform rate strucnues would address affordability and fairness. 

(Rendell) 

No Position. 

Yes defers ta the Office of Public Counsel's position on this issue. 




The appropriate rate structures are subject to the resolution of other issues.



PAGE 46 

ISSUE 28: What is the appropriate level of rate consolidation for the water systems in this 

case? (Falloutfss~e) 

POSITIONS 

AuF: AUF is not opposed to the implementation of the cap band rate structure sei forth 

in the PAA Order. However, the Commission may want to consider a state-wide 

consolidated rate struchae to address some of the af€ocdability con- expressed 

in this case. The Commission has previously found that uniform rate structures 

would address affordability and fairness. (Rendell) 

-' OPC. 

- YES 

No Position. 

Yes defers to the Office of Public Counsel's position on this ism. 

- Pasco . 

Cooo~. Pasco County adopts and incorporates by refmce the position statement of the 


- AG: 

STApF: 

ISSUE 29 

- OPC: 

- YES 

The AG concur# with the Office of Public Counsel. 

The appropriate level of consolidation is subject to the resoldon of other issues. 

What is the appropriate level of rate consolidation for the wastewater system in 

this case? (Fallout Issue) 

AUF is not opposed to the implementation of the cap band rate structure set fortb 

in the PAA Order. However, in designing rate structure, the Commission may 

want to consider a state-wide consolidated rate structure to address some of the 

affordabiity concerns expressed in this case. The Commission has previously 

found that uniform rate structures would address affordability and fairness. 

(Rendell) 

No Position. 

Yes defers to the office of Public Counsel's position on this issue. 

pare0 

Counw Pasco County adopts and incorporates by reference the position statement of the 

Office of Public Cowl for this issue. 

- AG: 

The AG concurs with the Office of Public Counsel.



PAGE 47 

STAFF 

ISSUE 30: 

POSITIONS 

- AUF. 

- OPC 

- YES: 

- 

Paaco 

coontv: 

- AG: 

STAFF 

ISSUE 31: 

The apppriate level of consolidation is subject to the resolution of other issues. 

What are the appropriate resulting repression adjustments for this Utility? (Fallout 

Issue) 


issues in this rate case. (R.endel1) 

No Position. 



Office of Public Counsel for thii issue. 


The appropriate repression adjustments are subject to the resolution of other 

issues. 

What are the appropriate monthly rates for the water and wastewater systems for 

the Utility? (Fallout Issue) 

POSITIONS 

- AUF This is a fall out calculation issue subject to the resolution of the other protested 

issues in this rate case. (Rendell) 

- OPC No Position. 

- YES: 

- PePW 

Coontv: 


Pasco County adopts and incorporates by reference the podtion statement Of the 



STAFF: The appropriste monthly rates me subject to the resolution of other issues. 

ISSUE 31A Are the resulting rates affordable within the meaning of fair, just and reasonable 

pursuant to Sections 367.081 and 367.121, Florida Statutes?"

L 

ORDER NO. PSC-I 14544-PHO-WS 

DOCKET NO. 100330- WS 

PAGE 48 

POWl'IONS flhis issue was added subseauent to the Prehearing Conference and the 

parties have not vet had a chance to state tbeir uosition.) 

OTHER ISSUES 

ISSUE 32: What are the appropriate d o m e for funds prudently invested charges for the 

Utility's Bnczc Hil wastewater treatment plant? (Fallout Issue) 

POSITIONS 

- AUF: This is a fall out calculation issue subject to the resolution of thc other protested 



-* YES. Yes defers to the Office of Public Counsel's position on this issue. 

- Pasco 

Countv: Pasco County adopts and incorporates by reference the position statement of the 


- AG The AG concm with the Office of Public Counsel. 

- STAFF: No position pending evidence adduced at the hearing. 

ISSUE 33: 

POSITIONS 

What are the appropriate customer deposits for the Utility? (Fallout Issue) 

-* Aup. This is a fall out calculation issue subject to the resolution of the other protested 

issues in this rate case, The customer deposits should be established based on an 

average two month billing consistent with past Commission practice. (Rendell) 


- YES Yes defers to the Office of Public Counsel's position on this issue. 

- PnSeO 

m: 

- AG: 




.. 

ORDERNO. PSGII-O~~~PHGWS 


PAGE 49 

This issue is subject to the resolution of other issues. 

ISSUE 34: What is the appmpriate four-year rate case expense reduction for Docket No. 

080121-WS? (Fallout Issue) 

POSITIONS 

. . 

- AUF: . 

,. 

his is a MI out calculation iyue subject to the resolution of the other protested 

issues inthis-rate case. (Rendell) 

- OW: No Position.. 

-* YES. 

~- 

Ppsco 

Coanty , 

-. AG; 

Yes defers to th OfEce of Public Counsel's position Cm this issue. 

&: No position pending evidence ai the hearing, 

~~ 35:~ 

POSITXONS 

Ppasco County adopts and incorporates by refermcc the position stakmzg t of the 


.. 

The AG concutg with the Office of Public Counsel. 

~. 

. . 

. h.detedning whether any pokion of the interim increase granted should be 

'. ' refimded, how should the Rhd be dculated, and what is the amount of the . 

.refimd, if any7 (Fallout Issue) 

.. 

- AUF. This is a fall out dcdation issue subject to the resolution of the other protested 



- YES. Yes defers to the Office of Public Coimsel's position on this issue. . . 

- PPSCO 

-: 

- AG: 

Pasco County adoptsad incorporates by 'i-efaence the position statement of the 

office of Public~Cou&el for this issue. 

TheAG.concurs withtheOffice ofhblic Counsel. 

m. . 

.~ 

This issue is subject to the resolution of other ishe?. 

. . 

. . 

. . 

. ,

ORDER NO. PSC-I 1-0544-PHGWS 


PAGE 50 

ISSUE36 In determining whether any portion of the implemented PAA rates should be 

refunded, how should the refund be calculated, and what is the amount of the 

refund, if any? (Fallout Issue) 

POSITIONS 

- AUF 

- OPC: 

- YES: 

- Pasco 

Countv: 

&: 

STAFF: 

ISSUE 37: 

POSITIONS 

- OPC. 

- YES: 

- AG: 

STAFF: 

ISSUE 38 



No Position. 





This issue is subject to the resolution of other issues. 

What is the appropriate amount by which rates should be reduced four years after 

the established effective date to reflect the removal of the amortized rate 

expense for the instant case as required by Section 367.0816, F.S.? @dlOut 

Issue) 



No Position 



Office of Public Counsef for this issue. 


The amount of the rate reduction is subject to the resolution of other issues. 

In accordance with Order No. PSC-IO-0707-FOF-WS. what is the amount and 

who would have to pay the regulatory asset (or deferred interim revenues), if it is



PAGE 5 1 

POSITIONS 

- AUF: 

- OPC: 

- YES: 

- 

Pasw 

-: 

- AG: 

STAPF. 

ISSUE 39 

ultimately determined by the Commission that th 

revenues when it iirst applied for interim rates? 

Agrees with M. (Rendell) 

No Position. 


Utility v titled to those 



The AG concurs with the office of Public Counsel. 

Using the August 1, 2011-effective date of the implemented-PAA rates, a 245- 

day period is appropriate for the calculation of any redatory asset. However, the 

amount of any regulatory asset is subject to the resolution of other issues. 

Should this docket be closed? 

POSITIONS 

- AUF Yes. This Docket should be closed. Am’s has demonstrated that its quality of 

service is satisfactory, that it has made significaut impmvements. and no further 

monitoring should be required. Furthermore, additional monitoring would not be 

cost effective or productive. (Chambers, Luitweiler) 

- Opc: 

- YES: 

County: 

- AG 

No. The docket should remain open to continue the monitoring of AUF’s quality 

of service. (Vandiver, Poucher, Dismukes) 

Yes defers to the office of Public Counsel’s position on this issue. 

Pasco County defers to Office of Public Counsel. 




PAGE 52 

STAFF: If the Commission’s final order is not appealed and if another phase of monitoring 

is not required, this docket should be closed upon the expiration of the time for filing an appeal, 

the completion of the refund(s), if any, of the interim rates and the implemented rates, and the 

Utility providing proof, within 90 days of the Final Order in this docket, that the adjustments for 

all the applicable National Association of Regulatory Utility Commissioners Uniform System of 

Accounts primary accounts have been made. 

lx. EXHIBIT LIST 

Direct 


Stan F. Szczygiei 

Stan F. SzczYgiel 




Pmton Luitweiler 





susanchambers 

Proffered By Descriution 

AUF ss-I AAICorporateCharges 

Allocations Manual 

AUF ss-2 Florida-specific Analysis 

AUF ss-3 AUF 3-year average 

calculation bad debt acpense 

AUF PL- 1 List of W&WW systems 

included in this case 

AUF PL-2 Final Phase I1 QSM Report 

AUF PL-3 Pro-forma support for Lake 

Josephine and Sebring Lakes 

Project 

AUF PL-4 Pro-forma support for Breeze 

Hill Project 

AUF PL-5 F’ro-forma support for 

Tomoka Twin Rivers Project 

AUF PM bforma support for Leisure 

Lakes Project 

AUF PL-7 Pro forma support for Peace 

River Heights Project 

AUF PL-8 Ro-forma support for Sunny 

Hills Project 

AUF sc-1 Compilation of AUF 

actions/customer comments



PAGE 53 

Witnw 

susanchambers 

susanchambrrs 

susanchambers 

susanchambers 




Andrew Woodcock 

An& Woodawk 


Andrew WoQdeock 




Andrew Woodcook 

Proffered By 

Desabtion 

AUF SC-2 ~ . AUFrespo~~.ssues €-om 

AmdohdoFarmSSystem 

CustomeR 

, 

AUF sc-3 Fii Phase I1 QSM Report 

-AUF SC-4 AUF's report on compla@ to 

commission - ioil 

. . 

AUF SC-5 . AUF's rcport on complaints to ' ' 

- Cgnrnkion - 2009-2010 

AUF TR-I Composite SchcLtule of u&U 

percentages. approv=i by 

commission 

AUF. TR-2 Schedule comparing U&U 

W=W& 

AUF TR-3 ' COntiaential-U~ed 

mmked-bd salary Stuay 

ofd ATW-I RgMleofAndrewT. 

Woodcodc 

OPC 

.. 

ATW-2 List of pmtested systems 

OPC ATW-3 Comparison of U&U 

Calculati~ns and PAA order 

R ~ t i o m 

OPC ATW-4 Comparison of U&U Growth 

Factors 2008 Rate Case To 

PAA onla 

OPC ATW-5 WW TRatment U&U 

calculatiozls 

OX ATW-6 Aerial Phobgraph East Lake 

HanidFriendfy Estates 

service* 

OPC ATW-7 Ariel Photornh Hobby Hills 

Service- 

OPC ATW-8 Wastewater Tnatmmt U&U 

CalCUlatiOnS



PAGE 54 

Witness Pmffd By 

AIl~woodcock OPC 

Denise Vwdiver 

Denise Vandiver 

Dcnisevanaiver 

Denise vandiver 

Denise Vmdiver 


DeniseVdVer 

Earl Poucher 

Earl Pouoher 

OPC 

OPC 

OPC 

OPC 

Opc 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

AW-9 

.. 

ATW- 1 0 

DNV-1 

DNV-2. 

DNV-3 

DNV-4 

. .~ 

DNV-5 

DNV-6 

DNV-7 

DNV-8 

REP-1 

REP-2 

REp-3 

REP4 

. . 

Water Dishibution'And 

W a s t ~ ~ ~ dUSLU. t j n , 

calculations ' 

Summary Of FDEP 

conlptisnoeDatabascs 

Resume.of Denise N. 

Vandiver 

Citizens Response to Aqua's 

SummaryReportandcUrrprd " 

Status of Aqua's Quai* of '. 

.. 

service. 

Salaryand'WagesExpense ~ . 

and Payroll Taxes 

RateCaseExpense .. 

Florida Bar Sm,ey: Results of 

the 2010~Economic~ and laW .' 

mi& Management survey .. 

Listing of AU Invoices 

Provided in Response to staff 

DateRSqUCStSandOPC 

Dimvery for Rate Case 

Exparse 

AUF'sOriginaland , , 

Supplemental Responsest0 

StafFDateReqW ' . . 

AUF'sRgpo&to OPC 

productibnofDacument 

RequestNo. 123 

V i of Far1 Poucha 

Filed Testinim yofEerl 

Pouch 

. . 

Aqua PSC. copnplaint 

summary. 

psc Complaintf Pa& 1-100 

.'

.. 

.. 

. . 

. . 

ORDEBNO. PSC-114544-PH6-WS 


PAGE 55 

WitnCsg 

Earl Poucher 

Earl Poucher 

Earl Poucher 

EarI Poucher 

Earl Poucher 

Earl Poucher 

Ed Pouch= : 

&l Powher 

. . 

Eial poucher 

. . 

.. 

. . 

Kimberly Dismukcs 

Wberly Dismukcs 

Kimberly Dismukes 



Kimberly Msmukea 

Kimkly Dismukw 

. . 

Proffered By 

OPC 

OPC 

OPC 

DPC 

OPC 

" OPC 

' ' OPC 

. . 

.. OPC 

OPC 

, ~~ ~ 

OW' 

OK 

OPC . . 

OPC 

OPC 

. OPC 

OPC 

REP-5 ' PSC Cmphints Pqes 101- 

20 1 

REP4 - 

PSC cowplaints - Pages 202- 

303 

REP4 PSC Complaints - Pages 402- 

502 

REP-9 PSC Complaints -Pages 503- 

604 

REP-I0 Psc Complairn -Pages 605- 

700 

REP-I1 PSC Complaints - Pages 701- 

770

ORDER NO. PSC-1 1-0546PHO-WS 


PAGE 56 

.Witness 


Kimberly Dmukes 



KimMy Dmukes 






Kimbcrlp. Dmukes 



EofferedBy 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

OPC 

' OPC 

OPC 

OPC 

KHD-1 , 

Descrivtion 

AqUaAmeiiCa-onal 

Schedule6 Chart 

. KHD-1 Affilkte chargest0 AUF 

Schedule7 . . 

KHD-I List of Aqua contract operator 

Schedule8 Conbacts 

KHD-1 ~ 

.Schedule,9 

Managem~tandConSulting 

Services . ~. 

KHD-I .~ -ComnpnOfficRsand 

schedule10 Directors. 

-1. Company --for 

sdledule11 services 

Ouoiide . . 

KHD-1 Market-BasedComparison 

Schedule 12 Recalculation of Company's 

Hourly Rates 

XHD-1 Market-BasedCoxipxison 

SchedNe 13 Adjustment ofHourIy Rates 

for Oiaside Services 

KHD-1 

Schedule 14 

Market-BasedCom@n 

Adjustment for M&et Rate 

Difference 

KHD-1 

Schedule 15 

Company Explanation for 

Increase in Affiliate Expenses 

over CPI 

KHpl 

Schedule 16 

Aqua Services Management 

Fees - Com@n of Costs 

from Prior to Current Test 

Year 

KHD-1 

Schedule 17 

Adjustment f6r Unjustified 

Increase in Management Fees 

(GmwthinCustomwd 

QangehcpI) 

KND-1 Comparative Analysis - List 

Schedule 18 of Companies Examined



PAGE 57 

WltnesS 

Kimberly Disnukes 



Kimberly Dismukcs 





KimKUn 

Kim KUIZ 

Kim Kun 

KimKW-2 

Shawn Harpin 

ShaWnHarpi 

proffered By 

OPC 

OPC 

OPC 

Descriotion 

KHD-I Comparative Analysis -Map 

Schedule 19 ofplonda 

-1 Comparative Analysis - 

Schedule 20 Weighting of Classes 

KHD-1 Comparative Analysis - Cost 

Schedule 21 per Customex and Cost per 

ERC 

OPC KHD-I Compar;sOnofTypical 

Schedule 22 Monthly Bills - FPSC Report 

OPC 

OPC 

KHD-1 BadDebtExpense 

Schedule23 Cornparison 

KHD-1 Bad Debt Expenst - Ale- 

Schedule 24 Adjustment 

OPC KID-1 Adjustments to Billing 

Schedule25 Determinants 

OPC KHDl RatecaseExpense 

Schedule 26 

OPC KHD-I Historic Florida Rate Cases 

Schedule 27 with Didowed Rate Case 

Expense 

OPC KHD-1 DocumentsReferencedin 

Schedule28 T&q 

YES KK-I Yes WateriWa&waiex rate 

comparisons spreadsheet 

YES a-2 Aqua rate increase analysis 

YES 

YES 

YES 

YES. 

KK-3 Resident Complaint forms 

with statements and copies of 

bills 

KK-4 Photos of plumbing pnrts and 

sedimentdamage 

SH-I Gainavillc Apartment Market . 

T d 

SH-2 ' Gainesville Stick Built Market 

Trmds



PAGE 58 

Witness 

Shawn Harpin 

Shawn Harpin 

Mallq Starling 

Jack Mariano 

Jaok Mariano 

Jack Maciano 

Jack Mariano 

Jack Mariano 

Jack -0 

Jay W. Yingling 

YES 

YES 

YES 

Pasco county 

Pascocounty 

'Descriation 

SH-3 Anedondo Farms Repo/Lease 

TumReportAugust2011 

SH-4 Arredondo Farms 20 1 1 Move 

OutRePort 

(14) "Customercomplaints and 

pictures," as introduced at the 

Customg Service Hcaringm 

Gdnesville. Florida on 

September 12,201 1, and 

subsequently filed on 

September 20,201 1 

JM- 1 

Collection of Boil Water 

Notice Surveys completed by 

AquacustomeAinthe 

JasmineLakesandPalm 

Terractservicc- 

JM-2 Collection of e-maiIs and 

IateR received hln Aqua 

customers 

pasw county ~bf-3 collection of pictures of the 

repired effluent pipe, 

discardedpipeandktoation 

-P 

Pasco County JM4 June 23.201 1, Deparbment of 

EnvironmentaProProtcotion 

DEP) Warning Letter 

Pasco county JM-5 &kction of pi& of w 

overflow pipe d plan sheet 

showing the location ofthe 

pipe 

Pasco county JM-~ Copy of Mike Gamn letter to 

Aqua warding overflow pipe. 

STAFF JWY-I Watg US P d t Table fm 

AUF Systems in DeSoto, 

Highlands, Pasco and Polk 

county

I 

i 

I 

.. 

ORDER NO. PSC-1 I -0544-PHOWS 

DO-NO. 100330-WS 

PAGE 59 

Wimess proffered By 

Catherine A. Walker STAFF 

Caiherk A. Walker STAFF 

Gary P. Miller STAFF 

Ginay Marie Montoya " ' STAFF 

hie Penton 

Josie Pcnton 

STAFF 

STAFF - 

Daniela Sloau STAFF 

Daniela Slonn STAFF 

KimberlyDodson 

Jefsy s. GRenwell 

Jew S. Greenwell 

CAW-1 

CA W-2 

G-M-1 

' GMM-1 

JP-I 

JP-2 

DS-1 

DS-2 

~' Compliance 

Descriution 

!&atus of &h 

AuFWaterSysteminSL 

Johns Riw Watex 

M8nagemel?District 

: April 2010 CUP General 

Consent Ordef No. 935441 

Jungle ?en November 5,2010 

Noncomplianw Lcaer 

Xntcrlachen we Errtates 

August9.2011 Warning 

.Letter 

sunny Hills December 2010 

conialt.orda 

Pmautionay Boil Water 

Notices (PBWNs) for Sunny 

HilisUtilities '. ' 

&,Hill - sugar creck; . . 

Rosalie oaks; and Gibaonia 

WamingNotices 

List of 23 Boil Water Notices 

for.Six Systems 

STAFF KD-1 PBWNs for 40 Systems From 

' 2oOI)Fonvatd 

STAFF JSG-l~ Peace Riv& Heights J ia~ 

20 10 Consent order 

STAFF JSG-2 . Jasmine Lakes June 201 1 

WarningLmCr 

, Jeftiy S. -well . STAFF ' JSG-3 

' 

. Village Water August 2007 

Consent Ordg Withthe 

. SecbndandThird 

Amendmentr; - 

Rhonda L. Hicks' STAFF 

.. 

RLH-I Summary Listing of 2009 

Complaints Filed With the 

COmmiSSiOn 

. . 

. . . 

..

ORDER NO. PSC-11-05444'HO-WS 


PAGE 60 

Witness 

Rhonda L. Hicks 



M y L. Welch 

Kathy L. Welch 

Kathy L. welch 



witnes 

I3&?3&4 

WSe VMdiYW 


Denise VandiYer 

DeniseVandiver 

Stau F. Szczygiel 

Stan F. szczygiel 

.. 

~. 

STAFF' . . '. -2 ' 

Descrivtion 

. . 

Summay Listing of2015 

. : Complaints Filed With 

Commission 

STAFF : RLH-3 .;: sumxmry Listing of 201 1 

. . . . . .cOmptrintr,FdedWithtbe . ~ 

.. Commission~9/3O/II.) 

. . 

..' STAFF 

. . 

.: 

. . , , 

i,istingDfcprnplaintclose- 

OutCodeS~ ' . 

.. STAFF KLW-I . History of Testhon~~ 

STAFF 

STAFF 

STAFF 

STAFF 

OFT. 

.. UPC 

. . 

-0PC 

. .. 

. . 

. . 

~. 

KLW-2 ' Affiliated 

.~~ Repon' ... 

KLW-3 summmayofAquacMporate 

Auocatioas.byRftteBMd 

. 

2011. ' 

DNV-10, Summary 

. . ' 

. , 

. . ' '~ 

. . DNV-11' SummaryofBOii Water . .' '. 

N06ceS 

. . 

. , 

. . 

'OPC DNV-12. Summary of Sexvice H dgs 

Am .. SQ-4 

ss-5 '. 

. . 

. ... 

!

ORDER NO. PSC-I l-OS&PHGWS 


PAGE 61 

Stan F. Szczygiei 

SFan F. Szczygiel 


Stan F. Szcygicl 

Stan F. Szaygiel 

Stan F. Szwygiel 


Preston Luitwciler 

Preston Luitmibr 


Reston Luitweiler 

Preston Luitweik 

AUF PG11 Additional support for Sunny 

Hills hjed 

AUF PL12 A&tionalsupportf&tbe' . 

Peace River Heights Project 

AUF 

PL-13 Addiionalsupportforthe . . 

Leisure Lakes Project 

AUF . PL-14 

,, ~ 

CostpmjectionsforVilI~e 

W~fwaSbQal0r 

U s O l U i i ~ ~ '.- 

AUF PGIS '. . South SeaS CompIiie ~: 

susanchambcrs AUF SC-6 Jdy 12.2010 Later add 

attachmemts 

~-

ORDER NO. PSGIl-0544-PHO-WS 

DOCmNO. 100330-WS 

PAGE 62 

Witneq Pmffd By 

William Troy Rendell AUF TR-4 


WilliamTroy Rendell AUF TR-6 

Frank Seidman AUF FS-1 

SumIementd Rebuttal 

witness PmffdBy 




William Troy RendeU AUF TR-10 

William Troy RendeIl AUF TR-I 1 

pescriDtiOIl 

U&U Water Treatment, 

Distn’buton. and cdlection 

StafFRccommendation on 

water U&U 

Senate Resentation on Florida 

Foreclosures 

FrankSeidmau Curriculum 

v i 

DescriDton 

Comp&ite Exhibit-FGUA 

Rates 

FGUA ~zesoluti~nNo. 2012- 

02 

AUF Rate Comparison 

Cust~mer Complaint and 

RFsp0nse 

AUF 9-8-10 Letter& Ms. 

Scluxgel 

Parties and Staff reserve the right to identify additionai exhibits for the purpose of QOSS- 

examination. 

X. PROPOSED STPULA TIONS 

4 ~saues Not in Dlrllate Deemed Sti~nlate d Pllmuant to S.lZOW13Hb). Florid. Statutes 

(The issues are numbemd~as 

designated in the staff proposed agency action recommendaton 

dated May 12. 2011, and approved by the Commission at the May 24, 2011 commission 

Conference -&Order NO. PSC-ll-MS6-PAA-WS).

ORDERNO. PSC-11-0544-PHO-WS 


PAGE 63 

RATE BASE 

PAA ISSUE t: Should the audit adjustments to rate base and operating expenses to which 

the Utility agrees, be made? 

STIPULATION Based on audit adjustments agreed to by the Utility, land and working 

capital be increased by $160,093 and $79,006, respectively, and operation 

& maintenance ( O w expenses shall be based by $255,390. 

Specifically, the following adjustments to rate base and O m expenses 

shaU be made. 

PAA ISSUE 3: Should adjustments be made to the Utility‘s pro f om plant additions? 

STIPULATION The Utility’s requested PAA-pro forma plant additions should be 

d e c r e a s e d by $137,060 for water and by $565,288 for wastewater. 

Accordingly, accumulated depreciation should be increased by $102,867 

for water and $85,016 for wastewater, and depreciation expense should be 

decreased by $21,698 for water and $36,524 for wastewater. Momver, 

the Utility’s property taxes should be decreased by $6,399 for water and 

$1 1,972 for wastewater. The specific rate. band and system adjustments 

are set forth below.



PAGE 64 

. ~. ...

ORDERNO. PSC-I l-O%PHO-WS 


PAGE 65 

Pmjects Requested in the MFRS 

I I utilitv I



PAGE 66 

Additional Proiects not in them 

7- 

Pro Forma Plant Im mvement 1 DocumcntedAmt. 

East Lake Harris I Chlorine Conversion I $18.254 I 

Haines Creek I Hydropneumatic Tank Replacanent I 13.800 1 

Jungle Den 

WWTP upgrades 11,900 1 

Imperial Mobile Terrace 

Lake Gibson Estates 

Tomoka/Twin Rivm 

Valencia Termce 

Stormwater project 

Replacement of lift station pump #2 

Water Flushing Upgrades 

1 Chlorine Conversion 

I Total: 

I 

23,698 

6,035 

32,560 i 

5847 

PAA ISSUE 4: Do any water systems have excessive unaccounted for water, and, if SO, 

what adjustments are necessary? 

STIPULATION 

The percentages for excessive unaccounted for water (EUW) for each 

water rate band and stand-alone system are shown below. 

The adjustment to F’umhased Power, Chemicals, and Purchased Watex 

expenses for Rate Band 4 is $96.

ORDER NO. PSC-11-0544-PHdWS 


PAGE 67 

PAAlFsuE5: 

Sl”ULATI0N 

PAA ISSUE 6: 

what the appropriate used and useful pcatagcs for water treatment 

and related facilities of each water syste~~? 

The following table re5ects tke U&U percentages for the stipulatbd water 

treatment and dated facilities of e& system listed below: 

48 Estates . 

Giisonia 

What SA: the appropriate used and useful percentages for the Storage 

Eanks? 

100 

61

ORDERNO. PSC-114544-PHO-WS 


PAGE 68 

STIPULATION: 

ISSUE 7: 

STIPULATION 

PAA ISSUE 8: 

All of the AUF storage tanks shall be considered 100 percent U&U. 

What am the appropriate used and useful percenages for water 

distribution systems? 


distribution of each system list below 

Do any wastewater systems have excessive infiltration and inflow and if 

so, what adjustments are neceuary?

ORDERNO. PSC-114544-PHO-WS 


PAGE 69 

STIpULATIoN: The appropriate percenrages for excessive Infiltration and Mow (IBtI) for 

each wasttwater rate band and stand-donc system are shown below: 

PAA ISSUE 9: 

STIPULATION 

The adjustments to purchased Power, Chemicals. and Purchased 

Wastewater qenses for Rate Battd 2, Rand Band 3, and Breeze Hill are 

($994, ($22,6G6), and ($5.098). respecoIVelly. 

What are the appropriate used and useful pceutsges for wastewater 

tmtment and relaad facilities of each wastewater system? 

The &dhving table reflects the U&U pacencages for the stipulated 

wastewnter imatmint and related facilitiea of each system i i below: 

Palm Tenace 

ParkManor 100 

PAA ISSUE IO: what are the Bppropriate a~ed mid useful percentnges for wastewater 

collection systems? 

STIPULATION 

The following table refleas the u&U pa;centagesfor the stipulated 

wastewater collection of each system listed below:

ORDER NO. PSC-11-0.544-PHO-WS 


PAGE 70 

System WWCoU. System % 1 

Arredondo Farms 100 I 

Florida Central Commerce 100 1 

PAA ISSUE 11: Should any further adjustment be made to Other Deferred Debits? 

STIPULATION. Other Deferred Debits shall be inmased fiather by $14,042 for the 

jurisdictional systems to reflect the appropriate 133nonth average balance 

as show in the table below:



PAGE 71 

PAA JSSUE 12: 

-: 


PAA ISSUE 16 

STIPULAT ION 

PAA ISSUE IS: 

STIPULAmON 

Should any adjustmats be made to Accrued Taxes? * 

Consistent with the Commission’s decision in the Utility’s last rate case, 

A~~~edTa~e~shallbereducedby$1,917,134onatotal~mpanybasisto 

normalize the test year Accrued Tax balance for purposes of setting rates. 

The duction of $1,917,134 represents the total for AUF. The 

Commission only has jurisdiction over 60.17 percent of the total AUF 

systems. This represents a reduction of $1,153,548 for the jurisdictional 

systems as shown in table below: 

What is the appropriate capital structure to use for rate setting purposes? 

The appropriate capital structure to use for rate setting purposes is based 

on the capital structure of AUF. 

What are the appropriate cost rates for short and long-term debt for the test 

Y d 

There is no short-term debt in AUF’s capital structure. The appropriate 

cost rate for long-term debt for the test year is 5.10 percent.



PAGE 72 

PAA ISSUE 19: 

STIPULATION: 


What is the appropriate return on equity (ROE) for the test ye& 

The appropriate ROE should be a.s set out in the Commission-apmvd 

leverage formula 

PAA ISSUE 21: Should any adjustments be made to disallow fines and penalties assessed 

to the Utility? 

STIPULATION O M expenses shall be reduced by $12,767 to remove expenses related to 

fines and penalties. The specific adjustments to each rate band and system 

are shown in the table below: 

PAA ISSUE 23: Should any adjustments be made to Sludge Hauling, Contractual S dots 

-Accounting, and Contractual Services - Legal e xps? 

STIPULATION 

O&M expenses shall be reduced by $29,949 to refleet the appropriate 

Sludge Hauling, Contractual Services - Ammthg, and Contractual 

Services - Legal expenses. The specifx adjustments to each rate band and 

system are shown in the table below:

ORDER NO. PSC-I I-0544-PHO-WS 


PAGE 73 

PAA ISSUE 25: 

STIPULATION 

Should any adjustments be made for Director and Offica Ljf&dity 

insurance? 

Consistent with Commission practice, OBtM expenses shall be reduced by 

$5,289 for its jurisdictional system to reflect a sharing of the cost of 

Director and officers Liability (DOL) insurance between ratepayers and 

the Utility, as shown in the table below: 

I

ORDER NO. PSC-1 I-0.544-PHO-WS 


PAGE 74 

PAA ISSUE 29: 

STIPULATION: 

Should an adjustment be made to the Utility's normalization adjustments? 

O&M expenses shall be decreased by $33,748 for water and increased by 

$1,768 for wastewater. The specific adjustments for each rate band and 

stand-alone system are shown in table below: 

PAAISSuE30: Should an adjustment be made to the Utility's pro forma expense 

adjUstmelltS? 

STIPULATION: O&M expenses shall be increased by $83,790 for waw and d e c d by 

$431 for wastewater, rls shown in the table below. In addition, AUF shall 

file a report witb the Commission detailing the outcome of the dispute 

with the City of Lake Worth Utilities, within 30 days of the resolution of 

the dispute.

ORDEX NO. PSC-I 1-0.544-PHO-WS 


PAGE 75 

PAA ISSUE 31: 

STIPULATION 

PAA ISSUE 34: 

STIPULATION: 

PAA ISSUE 41: 

STIPULATION: 

Should an adjustment be made to O&M expense to remove the additional 

cost of mailing multiple bills to the same customers who have more than 

one class of service? 

The costs of mailing 2,892 duplicate bills in the amount of $14,142 shall 

be. removed from 0824 expense for the Fairways water system 

What, if any, limit should be imposed on the subsidies that could result if 

the Utility’s rate bands and stand-alone systems are p ddy or Illy 

consolidated? 

Tbe appropriate subsidy limit for the water systems and the wastewater 

systems should be $12.50. ?his subsidy limit is applicable only to the 

residential class, and is based upon usage levels of 7 kgals per month for 

the water systems and 6 kgals per month for the wastewater systems. 

Should the Utility be authorized to revise its miscellaneous senice 

charges, and, if so, what are the appropriate charges? 

AUF shall be authorized to revise the Miscellaneous Service Charges for 

its Breac Hill and Fairway systems The appropriate charges are 

reflected below.



PAGE 76 

PAA ISSUE 42: 

STIPULATION: 

PAA ISSUE 48. 

STIPULATION 

B. M e 

ISSUE 12: 

What are the appropriate service availability charges and allowance for 

funds prudently invested charges for the Utility? 

The Utility’s previously-approved uniform meter installation, service 

installation, main extension, and plant capacity charges are appropriate for 

Am’s Breeze Hill, Fairways, and Pease River stand-alone systems. 

AUF’s proposed uniform engineering fees are cost-based and appropriate, 

However, the Utility’s proposed uniform field inspection fees shall be 

denied for lack of support documentation in accordance with Section 

367.091(6), F.S. 

Should the Utility be required to provide proof that it has adjusted its 

books for all Commission approved adjustments? 

To ensure that the Utility adjusts its books in accordance with the 

Commission’s decision, AUF shall provide proof, within 90 days of the 

final order in this docket, that the adjustments for all the applicable 

National Association of Regulatory Utility Commissioners Uniform 

System of Accounts primary accounts have been made. 

B Sti~~lntions Are Issues to Which AUF and Staff Amee and the Intervenors Take 

No Positioq 

What is the appropriate Commission-approved leverage formula to use- in the 

case? 

STIPULATION AUF and Staff agree that the appropriate leverage formula to use is the 

leverage formula in ef€ect when the Commission makes its final decision. 

XI. PENDING MOTIONS 

None.



PAGE 77 

XI. PENDING CONFIDENTIALITY MATTERS 

Them are no pending confidentiality matters at this time. 

XIII. POST-HEARING PROCEDURES 

If no bench decision is made, each party shall file a post-hearing statement of issues and 

positions. A summary of each position of no more than 75 words, set off with asterisks, shall be 

included in that statement If a party’s position has not changed since the issuance of this 

Preh-g Order. the post-hearing statement may simply restate the prehearing position; 

however, if the preheating position is longer than 75 words. it must be reduced to no more than 

75 words. If a party fails to file a post-hearing statement, that party shall have waived all issues 

and may be dismissed from the proceeding. 

Pursuant to Rule 28-106.215. FAC., a praty’s proposed findings of fact and conclusions 

of law, if any, statement of issues and positions, and brief, shall together total no more than 50 

pages and shall be filed at the Same time. 

XIV. RULINGS 

A. Opening statements, if any, shall not exceed ten minutes per party. 

B. The Emergency Motion filed November 7, 2011, to compel AUF’s Responses to 

Yes’s Third Set of Interrogatories and TWd Request to Produce is denied as bemg premature. 

C. Pasco County witness Mariano is excused from the hcaring on November 29 and 30. 

201 1, and his testimany, if he is ultimately required to attend the hearing, will be taken on 

December 1,2011. 

D. OPC’s Motion to Seike Swulemental Re.buttal Tesfimonv Filed bv Aaua 

In rate case proceedings, the Commission schedules Customer SnVice Hearings to listen 

to the testimony of customers regarding the quality of service of the utility requesting a change in 

rates. The purpose and focus of those hearings is to hear fiom the customers, not the utility. The 

testimony of each customer is taken under oath. The service hearings are transcribed and are 

made part of the record for purposes of the Commission’s decision. As a matter of general 

practice, the Commission permits the utility to file a response to the customer testimony. At the 

Greenacres Service Hearing, Commission staff reserved Exhibii 2 as the Utility’s Response to 

customer testimony. The Presiding Officer at the Service Hearing approved the filing of a 

response by November 3,201 1. Customer Service Hearings were to be held throughout August, 

September, and October, 201 1, in ten separate service hearings. The transcripts of the last two 

sewice hearings were not due until November 1 and 2,2011, respectively, and the response was 

due one day after the last transuipt was due. On Novembcr 3,201 1, AUF filed Supplementd



PAGE 78 

Rebuttal Testimony of three witnesses addressing the customer testimony at the ten service 

hearings! 

On November 4.20 1 1, objecting to tk filing of this Supplemental Rebuttal Testimony, 

ow filed its Motion to Strike Supplemental Rebuttal Testimony Filed by Aqua. OPC states that 

the last date. to file rebuttal testimony was established as October 27. 2011, in the Order 

Establishing Procedure. OPC argues that it was not necessary for AUF to wait for the transcripts 

to file responsive testimony. OPC contends that it timely filed its testimony based on the 

customer testimony derived from the service hearings, and accordingly, AUF should be held to 

the same standard. 

AUF filed a timely response to OPC‘s motion on November 7,201 1. AUF responds that 

commission staff requested AUF file its responses to the customer’s testimony in a late-filed 

exhibit. AUF states that there wex numerous references to the November 3, 2011 filing, 

including AUF’s intent to file the exhibits with the testimony of a witness under oath. AUF 

points to Order No. PSC-114504-WS. issued October 27. 201 1. in this docket, in whieb the 

Pmhearing Officer acknowledged permission to lawfile exhibits responsive to customer 

testimony. 

Clearly, AUF was given until November 3,201 1. to file a response. As noted above, 

although it was contemplated that it would be an exhibit and an exhibit number was reserved for 

that purpose, AUF chose to file supplemental rebuttal testimony from three separate Witnesses. I 

find that whether the response was filed as an exhibit or as testimony. thm is no material 

difference. Further, to require AUF to convert the testimony to an exhibit format would serve no 

purpose, and cause undue rate case expense. Finally. by filing its response as testimony, the 

Intervenors how exactly which witnesses to cross-examine. 

Based on the above, I fmd that a response was specifcdly allowed on November 3,201 1, 

and that them is no prejudice to the Intervenors. Therefore, OPC’s Motion to Strike 

Supplemental Rebuttal Testimony Filed by AUF is denied. 

E. Dimute on Inclusion of Issue 24 

At the Issue Identification Meeting held on July 29,201 1, the parties could not on 

the appropriateness or the wording of OPC’s proposed Issue 24. OPC‘s proposed wording of 

Issue 24 currently states: 

Are the total operaling expenses prudentIy incurred such that the. resulting rates 

are affordable within the meaning and intent of fsir, just, and rearonable purmant 


‘ AUF did Uae same in its last rate case, Docket No. 080121-WS. 

3 

1 note that customers can write the Commission mfamcing this docket, and their letters will be placed in the 

wrrespondence side of the docket file and be available to the cammissionas for review.

ORDER NO. PSC-I 1-05WPHO-WS 


PAGE 79 

By Order No. PSC-I 1-0484-PCO-WS, issued October 25,201 1, the parties were allowed to file 

memoranda on the appropriateness of including this Issue. Both AUF and OPC timely fded their 

memoranda 

1. OPC’s Memorandum 

OPC argues that pursuant to Rule 28-106.201, F.A.C., in a dispute involving disputed 

issues of material fact, the Commission may only grant or deny the petition, but not modify the 

disputed issues. Further, OPC notes that Section 120.57(1)@), F.S., provides that “[a]U parties 

shall have an opportunity to respond, to present evidence and argument on all issues involved,” 

and OPC argues that the. agency takes the case as it fmds it once a determination is made that the 

petition contains the information required by the uniform rules. 

OPC goes on to state that the issue of the affordabdity of the rates involves issues of 

material fact, and that the Commission will need to make factual determinations on whether the 

customers can afford the requested rate increase. opc argues that the Commision ”will need to 

make a factual determination if the totality of the operating costs in the test year were incurred in 

a prudent manner or whether Aqua spent too much money in total on its operating costs.” 

OPC argues that pursuant to Sections 367.081 and 367.121, F.S., the Commission must 

set rates which are ‘‘fair, just, reasonable, compensatory, and not unfairly discriminatory,” and 

that included in this calculation is the concept of affordability. OPC notes that the concept of 

“aEordabidity” was specifically addressed in AUF’s last rate case! 

OPC argues that the contention of staff in its prehearing statement “that the issue as 

worded is flawed,” is based on a faulty premise. OPC argues that the faulty pmnise “is that an 

expense can be determined to be prudent based solely on reviewing the cost in isolation.” OPC 

argues that the Commission “must review the sum total of the. operating costs before they make a 

final determination of whether any given cost was prudently incurred.” Because rates are set 

prospectively, OPC argues that a utility’s operating expenses, unlike capital improvements, may 

be cut or reduced, is., expenses such as salaries or &lite costs may be cut or reduced on a 

going forward basis. 

OPC rejects staffs proposed mociiication of the issue,’ stating that such propd 

‘‘materially changes the meaning of the issue.” However, OPC states that it would be Willing to 

restate the issue as follows: 

Have the total operating expenses been incurred in a prudent matter such that the 

resulting rates are affordable within the meaning and intent of fair. just and reasonable 

pursuant to Sections 367.081 and 367,121, Florida Statutes? 

6 

See OTder No. PSC-090385-FOF-WS. issued May 29,2009. in Docket No. OSO121-WS. In re: ADDlication for 

increme in water and wastewter rates.. . Lw Aaua U tilities Florida lnc.. p. 127. 

’ Staff suggested m its prehearing statement that the Issue could be reworded to state as follow: “Are the Esulting 

rates affordable within the meaning of fair. just and reasonable pursuant to Sections 367.081 and 367.121, Florida 

statutes.-


DOCKETNO. 10033WWS 

PAGE 80 

OPC notes that the case of Citizens v. Public Service Commissio~ 435 So. 2d 784 @la. 

1983), might be cited for the proposition that the Commission has the discretionary aufhority to 

determine the issues that might be litigated in a rate case. OPC distinguishes this instant case 

fmm that case by noting that in the Citizens case the Commission excl& an issue that was 

raised for the first time on reconsideration; here, OPC notes that it raised its issue prior to 

prehearing, tmd thus all parties are af€oFdeddue process to respond to this issue at hearing. OPC 

also argues that the situation in this case is different from the facts in a 2009 Florida Power & 

Light Company FPL case (2009 FPL case)! In the 2009 FPL case, a psrty requested inclusion 

of issue as follows: “What is a fair and reasonable rate for the customers of Florida Power & 

Light Company?” The issue was not allowed. OPC states that %e F’rebearing Officer ruled that 

the issue referenced legal standards . , , in Chapter 366. . . . and permeated the issues in that 

docket.” OPC argues that *le the issue in the 2009 FPL case and this case may appear to be 

similar on the surface, they are not because OPC‘s proposed ’’Issue 24 quires the Commission 

to make factual findings.” 

In its concluding paragraph, OPC notes that ‘%e Commission has excluded issues when 

they have been beyond the scope of the current docket or were ‘subsumed’ in another issue. 

thereby allowing the parties to address the merits of the issue.” OPC argues thrd the issue is 

clearly within the scope of this proceedmg and is not subsumed in any other issue. OPC notes 

that it is asking the commission to “make a htual determiiatim on the phcy of the 

Company’s actions in innaring all of the operating costs during the test year as it impacts the 

affordability of rates.” and that there is no other single issue that addresses this 

In its memorandum, AUF argues that to allow OPC to pursue this issue would inject “an 

unprecedntcd and legally unsupported criterion to determine AW’s rates.” AUF argues that the 

applicable statutes and case law require that once an expense is detennined to be prudently 

incurred, then rates must be set so as to allow a utility to recover those expenses and a fair &e of 

return on its used and useful investment. AUF further argoes that the ‘’pmdency of all expenses 

is an issue already subsumed within other issues before the Commission.” AUF further notes 

that the idea of “affordabiity‘‘ has never been used to deprive a utility of its prudently i n 4 

expenses, but has been “limited to designing the appropriate rate structure.” 

Citing Order No. Psc-o2-1537-PcO-TL, issued Novembez 12, 2002.9 and Order No. 

PSC-~~-I~W-PCO-EU,’~ issued JU~Y I, 1999, AUF argues that the “Commission may properly 

limit the nature and scope of issues” and may ‘kmve proposed issues on the basis that positions 

~ 

: 

&2 Orda No. PSGO9-0573-P(xEI, issued August 21, 2009, in Docket Nos. 086677-EI and 090130-EI, h.!S 

and Inre:2009Dwrec iation shulv bv Florida 

Power & Lkht ComDany. 

’ Do*M NO. 020507-TI, b I1 T j 

w& Docket No. 981890-EU, In m: Generic Investiggtion into the el ecnic Utilitv reserve mareinp 

&mud for Psomsular Florida.



PAGE 81 

on those issues can be adequately presented within the context of other issues." Further, AUF 

notes that the Prehearing Officer has that authority." 

citing many cases12 and Section 367.081(1), AUF argues that in detefinining a utility's 

rates, the Commission must fix rates which are just, reasonable, compensatory, and not unfairly 

discriminatory, with such rates beiig at a level which will allow a utility the opportunity to 

recover its prudently incurred expenses and to earn a fair return on its investment that is used and 

useful in the public service. Further, in Southern States Utilities. Jnc. v. Florida Public Senice 

Commission, 714 So. 2d 1046 (na. 1st DCA 1998), AUF argues that the First District Court of 

Appeals (Court) made it clear that, in the aggregate, rates and charges must assure a water and 

wastewater utility an opportunity to recover its revenue requirement, which it described as "the 

cost of the service the utility provides, operating expenses as wll as cost of capital." Moreover, 

AUF argues that the Court explained that, while an "affiility" criterion may be used to 

design a utility's rate structure, such a criterion cannot be used to deQease a utility's overall 

revenue requkment. Southern States Utilities. Inc, 714 So. 2d at 1053. 

AUF argues that to the extent "affordabdity" would cap the rates of certain systems at a 

level that would interfere with the recovery of the revenue requirement, the resulting "shoafall" 

would need to be recod from the remaining ratepayers of the utility. Based on the above, 

AUF argues that the pertinence of any BonMdity questions or issues must be confiicd to the 

appropriate rate design of AUF's rate shucture. Based on all the above, AUF argues that OPC's 

attempt to use affordability to reduce Am's revenue requirement would contradict Florida law 

and result in confiscatory rates. 

AUF concludes its arguments by noting that nowhere in Chapter 367, F.S., is the term 

"affordabdity" ever used. AUF further notes that the term is used in Chapter 364, F.S. 

(Telecommunications Companies). and that, therefore, the Legislature is familiar with the term. 

However, AUF argues that even in regards to telmmmuniCations, "affordability" has never 

been used to deprive a telephone company of its right to mver its revenue requirement. AUF 

concludes that Issue 24, as proposed, should be excluded. 

3. Conclusion 

OPC attempts to distinguish this case fiom the 2009 FPL case.13 In that case, the 

Attorney oeneral proposed an issue as follows: what is a fair and reasonde rate far the 

customers of Florida Power and Lighr Cornpony? That issue was not included as a separate and 

distinct issue in the docket because Wzis issue references regal stan&& estnblished by the 

4 

wns of cub I' nu . Ho 

366 

Networks Infomution Services (PI Orida). LLC. and its atiiliafe. Brieht House NWOrks LLC. 

See United Tclahone CO. v. Ma , 403 So. 2d 962.966 (Pk 1981); Kcvstac Wata co . v. Bcn 's, 278 SO. M 

WyFla 1973); Westwood We. 1; v. Dadc Counw, 264 So. Zd 7 (Fls 1972); Gulf Pow CO . v. Bevis. 289 So. 

Zd 401 (Fla 1974); snd S wthm States Utilities. 1% v. Flo ri da Pubh 'C Service Cornmeswj, .. 

714 So. 2d 1046 (Fia 

1*DCA 1998). 

I' Docket No. 080677-El.



PAGE 82 

legislature in Chapter 366. F.S. and permeates th 

situation in this case is very similar. 

Luxes In the docket. "" I find that the 

OPC's argument that the prudency of any expense is a position that OPC may take in 

each of the issues dealing with revenue requirements. In Order No. PSC-07-0816-FOF-EI'5 we 

defined prudence as "what a reasonable utility manager would have done in light of conditions 

and circumstances which were known or reasonably should have been known at the time the 

decision was made."" Mdam-Webster dictionary defines prudent as: characteriized by, arising 

hm, or showing prudence; marked by wisdom or judiciousness; shrewd in the managoment of 

practical affairs; marked by circumspeCtion; disc- provident; hgal. Therefore, OPC's 

argument that costs are unaffordable, is an argunent about the prudency of the costs. I find that 

OPC's revised permutation of the issue is likewise inappropriate. OPC and any party to this 

proceeding may challenge an expense item because that expense was imprudent The prudence 

or imprudence of that expense may be argued by each party, and may include the appropriateness 

of the individual expense. The parties may present such testimony or arguments as they deem 

relevant to the issue, including OPC's argument that flordabiiity is a component of detemmm g 

fair, just, reasonable, and not unduly discriminat ory rates. Based on the testimony and 

subsequent briefh of the parties, the Commission determines the legitimate and prudent e~pcnse 

to be allowed in each individual issue and will determine the revenue requirements for the utility. 

Therefore, as reganiiig expenses, I find that OPC's concerns may be adhsed as the 

Commission comes to each of the requested expenses in dispute, and that, thmfow, the issue of 

whether the expenses are legitimate and prudent is subsumed in the individual issues. Therefw, 

in considetation of the above, and having reviewed the memoranda of OPC and Am, the 

applicable caa law, and statutes, I find that pmposed Issue 24 is neither required nor 

appropriate, and it shall be excluded and strickm. 

Moreover, the issue proposed by OPC, placed at the conclusion of the revenue 

requirements section, could jeopardize the ultimate decision of the Commission. If the 

Commission were to first determine the revenue requirements and then reduce those 

requirements because it de.te!mined that the results were unaffordable, the Commission could run 

afoul of a long line of cases regarding ratesetting. Pursuant to the holdings in Gulf Power 

Comuanv v. Wilson, 597 So. 2d 270 (Fla 1992); Bluefield Water Works & Imumvement 

Comuanv v. Public Service Commission of West Vhinia, 262 U.S. 679 (1923); and 

Power Commission v. How Natural Gas Co., 320 U.S. 591 (1944), a utility must be given an 

opportunity to recover its legitimate and pnident expenses. and a .fair rate of return on its 

investment that is used and useful in the public mice. 

Having found that Issue 24, as worded by OPC, should not be included, I do note that 

Commission staff's proposed rewording of the issue as a rate issue is appropriate. As noted in 

the Southern States case cited above, it appears that the appropriate place to address 

"affordability" is in the rate structure portion of the issues. Once revenue requirements have 

" Ordm NO. PSC-09-0573-PcaEl. issued August 21,2009. 

" Issued OctOber IO, 2001, in Docket No. 060658-EI, In ~- re: P&ion on behalf of Citizens of the State of Florida to 

FlddaIn~.n,refmdcusromrnS143m iliiOn 

ic Ut- .. 

620 N.E 2d 826 (Ohio 1993). 

..



PAGE 83 

been established, the ra!e smcture is determined Therefore, proposed Issue 24 is stricken, and 

an issue concerning affodability shall be added. The issue concerning affordability is a rate 

structure issue and shall be numbered as Issue 3 1 A and worded as follows: 

Are the resulting rates affordable within the meaning of fair, just and reasonable 

pursuant to Sections 367.081 and 367.121, Florida Statutes?’’ 

At h&g the parties may state their position on the issue as modified. 

F. Inclusion of Issue 26 as an Issue 

From review of the record and the protests and cmss-petitions of the parties, it appears 

that Ms. Lucy Wambsgan was the only one who specifically addressed this issue and could be 

said to have put it in dispute. She has now withdram as a party. Yes argues that the language in 

its Cross-Petition Protesting Certain Portions of the Proposed Agency Action would allow this 

issue to still be considered as a disputed issue. In its cross-petition, Yes states: 

F’ursuant to Section 120.80(13)@), Fla. Stat., a Section 120.57 hearing may only 

address those issues in dispute and any other issues not in dispute are deemed 

stipulated. Yes reserves the right to take positions and file testimony on any 

additional issues raised by any other party’s protest or cross-protest or any fallout 

issues resulting from those issues identified above or identified in any other 

party’s protest or cross-protest. 

I fmd that the above-noted language does not preserve Issue 26 as being in dispute. However. 

because Issue 26 is affected and is dependenl on the resolution of other disputed issues, I find 

that Issue 26 shall be preserved as a fallout issue as it is c-tly listed. 

G. The parties have all aged that staffwitnesses Lott, Daugherty, Schwarb, Ymgling, 

Chelette, Welch and Hicks, and Yes witness Kun may be excused from the hearing and their 

testimony and exhibits, if any. shall be admitted If M Commissioner has questions for these 

witnesses, they may be excused from the hearing. and their testimony and exhibits shall be 

placed into the rewrd at the time they would have been scheduled to appear. 

H. OPC has agreed that staff witnesses Walker, Hanison, LaUghIi Piltz, Rauth, Eck, 

Dodson, and Rodriqua @EP persormel) may be excused from the hearing and their testimony 

and exhibits, if any. shall be admitled. If no Commissioner or ohr party has questions for these 

witnesses, they may be excused fiom the hearing, and their testimony and exhibits shall be 

placed into the record at the time they would have been scheduled to appear. 

I. The parties have also agreed that the following staff Water Management District and 

DEP witnesses, if needed, may be taken up out of turn and on a date certain as follows: 

November 29,201 1: WMD witness Walker 

November 30,201 1: DEP witnesses Greenwell and W c o

ORDER NO. PSC-11-0544-PHO-MS 


PAGE 84 

_ _ 

December 1,2011: DEP witnesses Dodson, Penton, Montoya. Rauth, Rodriguez, Miller, 

Sloan, Harriron, Eck, and Carrim 

Therefore, these witnesses, $needed, shall only be required to attend the h-g on the 

date noted, and their testimony and exhibits, time permitting, will be taken up on that day, and 

out of order if necessary. 

It is therefore, 

- 

RONALD k BRISE 

chnmkioner and Prehearing Oacer 



Tallahassee, Florida 32399 

(850) 413-6770 

www.floridapsc.com 

ORDERED by Commissioner Ronald A. Btisd, as Pmhearing that this 

Prehearing Order shall govem the conduct of these proceedings as set forth above unless 

modified by the Commission. 

By ORDER of Commissioner Ronald A. Brk5, as Prehearing Officer, this B JXL day Of 

.November=. 

NOTICE OF FURTHER PROCEEDINGS 0 RJUDICIAL REVIEW 

The Florida Public Service Commission is required by Section 120.569(1), Florida 

Statutes, to notify partiea of any administrative hearing or judicial review of commission orders 

that is available under Sections 120.57 or 120.68, Florida Statutes, as well as the procedures and 

time hits that apply. This notice should not be construed to mean all requests for an 

administrative hearing 01 judicial review will be granted or result in the relief sought. 

Mediation may be available on a case-by-case basis. If mediation is conducted it does 

not affect a substantially interested person's right to a hearing.

. . 

OdDER NO; PSC-lI-0544-PHO-WS ' 


,PAGE 85 

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Any pany adversely ,affectea by this der, which is preliminary,. ,procedural or 

uderraediate in nature. may requm ,(1) ddemtion witbin .10 days euant to Rule 25- 

220376, Florida AMs@tiw Code;,or (2) judicial revigv by thc Florida Supreme Court, in. 

.. the ease of an cleckici &as or .telephone utili, or tlx .First Mct Cou@ of.Appeal, 

of a'wr or UtiIity. 'A moti& forreico6sideration Shall be fled ,wW .. the office of 

CommLpian Clerk, in the form prescribed by. Rule 25-220376.H~dtt AdwWmt~ 've Code. 

~udicial ew'of a ~pre~imhy,.pmceiura~ o+tennediate ruling .or aider is araflabfe if nvinv 

of the hd action win not pmvide an adequate remedy. Sudi review may be requested from the . . 

appoPriate.cOtirt, as-desuibedabove, putswn'to Rule9.100, --RulCS of Awllate 

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STATE OF FLORIDA - Public Service Commission

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